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EON confirms up to 11,000 jobs will go

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EON confirms up to 11,000 jobs will go
Photo: DPA
10:16 CEST+02:00
Germany's biggest energy group, EON, confirmed on Wednesday it would cut up to 11,000 jobs as it reported its first ever quarterly loss.

EON said it had a net loss of €1.49 billion ($2.14 billion) in the three months to June. The loss attributable to shareholders, a slightly wider definition of earnings, came in at €1.58 billion, compared with a profit of €1.63 billion in the second quarter of 2010.

A company statement said it would carry out a broad restructuring of its activities that would result in cutting 9,000 to 11,000 jobs, amid an expected loss of earnings sparked by the government's phase-out of nuclear power.

EON also cut its full-year forecast and expected dividend as earnings suffered from weaker sales of electricity and gas.

For the first half of the year, EON remained in profit, with a net income of €691 million, a figure that was nonetheless five times smaller than in the first six months of 2010.

EON pointed to a "massive decrease for all key earnings indicators," which it blamed on a sudden German government decision to mothball all nuclear reactors by 2022, starting in March.

The decision, following the March Japanese nuclear disaster, was accompanied by a tax on nuclear fuels that cut €1.9 billion from EON's operating profit, the group said.

It also suffered from long-term gas contracts at very unfavourable terms and poor results in its electricity brokerage activities.

The group slashed its full-year outlook and now expects a net profit excluding exceptional items of €2.1-2.6 billion from the previous estimate of €3.0-3.7 billion.

Shareholders were warned that prior guidance for a dividend of €1.3 per share would be cut to €1.0.

EON plans to restructure its operations to save €1.5 billion per year, and warned that "possibly 9,000 to 11,000 jobs could be affected" from a group total of around 79,000.

Details on planned job cuts are to be released in the coming weeks.


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