• Germany's news in English

Energy giant EON to divest away from Europe

The Local · 10 Nov 2010, 13:44

Published: 10 Nov 2010 13:44 GMT+01:00

Facebook Twitter Google+ reddit

The company, with annual sales of €80 billion ($110 billion), warned profits would fall in coming years and announced plans to offload €15 billion worth of assets by 2013.

"Europe's main priority is to make its energy supply more efficient and climate friendlier. But other parts of the world still have a lot of catching up to do in terms of expanding their generation capacity," it said.

"EON is a leading expert in building conventional and renewable generating facilities. Going forward, we intend to leverage our experience and expertise not only in Russia and North America but also in two other regions."

According to press reports, these regions are Asia and South America. EON did not say which assets were on the block but press reports have identified its power grid in Britain, thought to be worth about €4 billion, and its 3.5-percent stake in Russian gas giant Gazprom.

Finance director Marcus Schenck gave little away at a news conference on Wednesday, saying only that the company was "studying all the options" with regard to its British grid.

The new strategy is motivated by the need to restore profitability, with the company indicating that operating profit would fall in 2011 and 2012 before returning to the level of 2010 in 2013.

It warned of "considerable business challenges" in the years ahead such as German plans for a tax on nuclear fuel, the auctioning of EU carbon allowances and tougher conditions in the gas market.

The company said in October that it was being forced to write down the value of assets Italy, Spain, and France on its accounts by €2.6 billion and on Thursday EON said its third-quarter loss was €389 million.

It said its dividend payout would fall from €1.50 per share this year to €1.30 per share for 2011 and 2012. The proportion of its profits that it pays out to shareholders would remain at 50 to 60 percent, it said, indicating that it expects earnings to be lower in 2011 and 2012.

The asset sales are also aimed at reducing its debt pile, estimated at €45 billion ($62 billion), built up in recent years with acquisitions across Europe.

EON also aims to improve profits through a simplified organisational setup and renewed efforts to enhance efficiency. This will deliver €600 million in annual earnings improvements by 2013, it said.

"EON will become more focused and at the same time more international. In Europe, we're going to concentrate on what we can do best and on areas where we see the biggest opportunities for profitable growth," the firm said.

Story continues below…

"Outside Europe, we're going to achieve additional business growth by deploying our expertise in areas where we're a true outperformer," chief executive Johannes Teyssen said.

The news caused EON’s share to rise over 4 percent.


The Local (news@thelocal.de)

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Outrage over ruling on 'brutal' gang rape of teen girl
The now convicted suspects, sitting in court in Hamburg. Photo: DPA.

A 14-year-old girl was gang-raped and left partially clothed and unconscious in freezing temperatures. Now prosecutors are appealing the sentences for the young men found guilty, most of whom will not set foot in jail.

Dozens of Turkish diplomats apply for asylum in Germany
Demonstrators holding a giant Turkish flag protest against the attempted coup in Istanbul in July. Photo: DPA.

Since the failed putsch attempt in Turkey in July, Germany has received 35 asylum applications from people with Turkish diplomatic passports, the Interior Ministry confirmed on Wednesday.

Hertha Berlin fan club criticised for 'anti-gay banner'
Hertha BSC beat FC Cologne 2-1. Photo: DPA

A 50 metre fan banner apparently mocking the idea of gay adoption has overshadowed Hertha BSC's win in the Bundesliga.

Germany stalls Chinese takeover of tech firm Aixtron
Aixtron headquarters in Herzogenrath. Photo: DPA

The German government on Monday said it had withdrawn approval for a Chinese firm to acquire Aixtron, a supplier to the semiconductor industry, amid growing unease over Chinese investment in German companies.

Politicians call for tough sentences for 'killer clowns'
File photo: DPA.

Now that the so-called 'killer clown' craze has spread from the US to Germany, elected officials are drawing a hard line against such "pranks", with some threatening offenders with jail time of up to a year.

Nearly one in ten Germans are severely disabled
Photo: DPA

New figures reveal that 9.3 percent of the German population last year were considered severely disabled.

The Local List
Germany's top 10 most surreal sites to visit
The Upside-Down House, in Mecklenburg–Western Pomerania. Photo: Olaf Meister / Wikimedia Commons

From upside-down houses on Baltic islands to a fairy-tale castle near the Austrian border, Germany is a treasure trove of the extraordinary.

Bavarian critics back Merkel for Chancellor again
Photo: DPA

The Christian Social Union (CSU) have long delayed backing Angela Merkel as their candidate for Chancellor in next year's general election. But now key leaders are supporting her publicly.

Four taken to hospital after hotel toilet bursts into flames
File photo: DPA.

Four guests at a Nuremberg hotel were taken to hospital due to smoke inhalation early Monday morning after a toilet there burst into flames.

Creepy clown scare spreads to Germany
Two of the clowns were apparently equipped with chainsaws. Photo: Pedro Pardo / AFP file picture

Police said Friday five incidents involving so-called scary clowns had occurred in two north German towns, including one assailant who hit a man with a baseball bat, amid fears that Halloween could spark a rash of similar attacks.

10 things you never knew about socialist East Germany
Sponsored Article
Last chance to vote absentee in the US elections
How Germans fell in love with America's favourite squash
How I ditched London for Berlin and became a published author
12 clever German idioms that'll make you sound like a pro
23 fascinating facts you never knew about Berlin
9 unmissable events to check out in Germany this October
10 things you never knew about German reunification
10 things you're sure to notice after an Oktoberfest visit
Germany's 10 most Instagram-able places
15 pics that prove Germany is absolutely enchanting in autumn
10 German films you have to watch before you die
6 things about Munich that’ll stay with you forever
10 pieces of German slang you'll never learn in class
Ouch! Naked swimmer hospitalized after angler hooks his penis
Six reasons why Berlin is now known as 'the failed city'
15 tell-tale signs you’ll never quite master German
7 American habits that make Germans very, very uncomfortable
Story of a fugitive cow who outwitted police for weeks before capture
Eleven famous Germans with surnames that'll make your sides split
The best ways to get a visa as an American in Germany
jobs available
Toytown Germany
Germany's English-speaking crowd