EON presses Merkel on extending nuclear power

EON presses Merkel on extending nuclear power
Photo: DPA
German power giant EON posted mixed quarterly results on Wednesday and pressed Chancellor Angela Merkel to live up to her promise to extend the life of some of the country's nuclear plants.

“There has long been a lack of clarity about the direction of Germany’s energy-policy,” chief executive Johannes Teyssen said. “This needs to change.”

Teyssen said German authorities needed to make “an environmentally and economically sensible decision on the future of nuclear energy in this country.”

Germany decided under previous centre-left chancellor Gerhard Schröder to phase out all nuclear plants by 2020. The conservative Merkel stuck to this decision in her first term while governing with his Social Democrats.

But her new centre-right coalition with the pro-business Free Democrats, in place since last autumn, has said it would extend the life of some of the reactors. She has not yet acted officially however, to the frustration of German power companies.

Their share prices have been weighed down by the uncertainty, with EON stock losing around 20 percent of its value since the beginning of the year.

On Wednesday, the shares fell by 0.65 percent to €23.29 in morning trading, while the Dax index of leading German stocks was 1.13 percent lower overall.

EON also fired a warning shot across Merkel’s plans to impose a nuclear tax, saying in a note to analysts this would shave €1.3 billion – €1.5 billion off its annual operating profit and threatening to cut back on investments.

The tax “might lead to a reduction in investments in order to maintain the group’s health,” it said.

EON also released better than expected second quarter operating results, though net profit fell by 9.0 percent to €1.7 billion ($2.2 billion) owing to tax effects and higher interest payments, the statement said.

Adjusted net profit, the figure focused on by analysts, slipped 1.0 percent to €3.3 billion, in line with an average analyst forecast compiled by Dow Jones Newswires.

On the operating level, EON reported better adjusted core earnings before interest and tax (Ebit) in the first half of the year of €6.1 billion, a gain of 11 percent from the first six months of 2009. Market forecasts had pencilled in a more modest figure of €5.83 billion. First half sales gained 6.7 percent to €44.3 billion, slightly lower than expected.

The power giant confirmed its full-year targets meanwhile, an increase of up to 3.0 percent in adjusted Ebit, and stable adjusted net profit.

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