• Germany's news in English
 
jobs_header_v3
Green energy policies bring power giant to €7 billion loss
"High voltage, danger to life." Photo: DPA.

Green energy policies bring power giant to €7 billion loss

AFP · 9 Mar 2016, 13:55

Published: 09 Mar 2016 13:55 GMT+01:00
Updated: 09 Mar 2016 13:55 GMT+01:00

Facebook Twitter Google+ reddit

E.ON, Germany's number one power supplier, said in a statement that massive writedowns on its electricity plants pushed it deep into the red, but at an underlying level, operating profit was "in line with expectations."

"We posted solid operating results in a very difficult market environment," said chief executive Johannes Teyssen.

"Our numbers reflect the far-reaching structural transformation that our industry is experiencing and that continues unabated in the current year.

German power utilities have complained that the country's transition from conventional carbon fuels to greener, cleaner sources of energy is squeezing their margins.

The cost of having to close down their nuclear power plants and the heavy subsidies afforded to renewable energy have pushed them deeply into the red, the companies argue.

The glut of government-subsidized solar, wind and other renewable power has led to a collapse in wholesale electricity prices.

Last year that led to a 10-percent drop in E.ON's operating profit, as measured by earnings before interest, tax, depreciation and amortisation (EBITDA), to €7.6 billion.

"Underlying net income" -- adjusted for one-off factors such as €8.8 billion in writedowns - was steady at €1.6 billion.

But despite the difficulties, the company said it had succeeded in reducing its net debt "significantly to €27.7 billion."

And management would propose a dividend payout of €0.50 per share for 2015.

Spin-off

As a result of the transformation of the energy landscape, Germany's two biggest players, E.ON and close rival RWE, have had to make huge writedowns on their conventional coal-fired power plants.

And they have both decided to split their conventional power operations from their renewable energy divisions.

In E.ON's case, the conventional business is being spun off into a unit called Uniper.

CEO Teyssen insisted this was "the right response to this transformation.

But the course ahead will be tougher and longer than anticipated."

And he warned that as a result of its planned spin-off, it expects the outlook for 2016 "to be significantly lower" than previously predicted.

"The difficult market environment will cause, in particular, free cash flow to be below earlier assumptions; future investments and dividends will have to reflect this," E.ON said.

"It's right for us to divide our operations into two companies, which will enable them to develop their respective businesses in line with their own strategy," Teyssen said.

"Precisely because we're facing huge challenges, we need to take decisive action. Our new setup will give our shareholders more options and E.ON and Uniper's management more leeway."

On the Frankfurt stock exchange on Wednesday, E.ON's shares were among the heaviest losers, shedding 0.44 percent to €8.29 in late morning, while the overall blue-chip DAX 30 index was up 0.73 percent.

For more news from Germany, join us on Facebook and Twitter.

Facebook Twitter Google+ reddit


Your comments about this article

Today's headlines
Berlin vs Munich: whose newborn polar bear is cuter?
Berlin's (left) and Munich's (right) newborn bears. Photos: Tierpark Berlin / DPA

Both city zoos welcomed baby polar bears into the world in November, with Berlin zoo its releasing first photos on Friday. But which one is more adorable?

Learn how to speak German like a silver screen icon
Dirty Harry. Photo: DPA

We all agree that there is no other option than to learn irregular German verbs by rote. But when you want a bit of downtime, why not learn from your big screen heroes?

Stolen Dachau 'Work will set you free' gate found: police
The entrance to Sachsenhausen concentration camp. Photo: DPA

An iron gate from the former Nazi concentration camp in Germany's Dachau with the slogan "Arbeit macht frei" ("Work will set you free") has been found two years after it was stolen, police said Friday.

Mystery flight path artist draws new message in sky
Photo: DPA

A pilot who likes to draw patterns in the sky using his flight path has returned with his greatest artwork yet.

Berlin 'abusing power' to stop Snowden coming to Germany
Edward Snowden. Photo: DPA

Opposition parties have accused the coalition government of overstepping its authority in its attempt to block American whistleblower Edward Snowden's trip to Germany.

Germany gains record number of Michelin-star restaurants
Head of the Michelin Guide, Michael Ellis (centre) with Michelin-star chefs at a presentation in Berlin. Photo: DPA.

Germany had a slew of newly minted Michelin-star restaurants this year, and its top-rated establishments held onto their prestigious three stars.

At last: Germany passes major disabled rights reform
People in wheelchairs watch as the German parliament deliberates on the new disability rights reform. Photo: DPA.

For years people with disabilities in Germany have called for legislation to provide them with better benefits and opportunities in life and work. On Thursday the German parliament passed such a reform - but is it enough?

How new German rules are holding refugee families apart
Children wait for food in Jarablus, Syria. Photo: DPA

Germany, trying to staunch the flow of Syrian refugees, has placed high hurdles for them to be reunited with their families, creating a Kafkaesque nightmare in the courts.

10 German Christmas cookies you have to bake this winter
Photo: DPA

Fire up your ovens and get ready to bake - here are ten festive German cookies and pastries that'll send your senses into paroxysms of yuletide joy.

5 things we learnt reading Germany's first Charlie Hebdo
Photo: DPA.

The very first German edition of Charlie Hebdo hit the shelves across the country on Thursday. So what can Germans expect if they buy it?

Lifestyle
10 German Christmas cookies you have to bake this winter
Sponsored Article
The key to launching your international career
Lifestyle
Our 10-step guide for doing Christmas just like a German
National
Here's why so many Germans vote for the far-right AfD
National
7 events in Germany that'll make December unforgettable
Lifestyle
7 frosty German sayings to make you a winter wordsmith
National
This is how unequal German society has become
National
Six things you should know about the Lufthansa strike
National
9 ways living in Germany will make you a better person
National
These 10 German Christmas markets cannot be missed
Features
8 German words that unlock amazing secrets in English
Culture
10 German words with simply hilarious literal translations
Lifestyle
7 things Germans do that make foreigners feel awkward
International
Why Donald Trump's grandad was booted out of Germany
National
This is what is really inside your Döner kebab
National
Rejoice! Christmas markets start opening across Germany
Education
These German universities are best at landing you a job
Travel
Why Heidelberg is Germany's most inspiring city
Lifestyle
This soppy German Christmas ad will bring you to tears
National
Here's where Germans speak the best (and worst) English
Culture
10 German books you have to read before you die
Culture
U-Bahn train found filled with autumn foliage in Berlin
Features
Seven German words that unlock amazing secrets about English
Travel
Germany's ten most beautiful towns you've never visited
6,663
jobs available
Toytown Germany
Germany's English-speaking crowd