• Germany's news in English
 
app_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

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."

Story continues below…

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.

Your comments about this article

Today's headlines
VW to pay US suppliers $1.2 bln over Dieselgate
Volkswagen model vehicles on a dealer lot in Bedford, Massachusetts, USA. Photo: Cj Gunther/Picture Alliance/DPA

German auto giant Volkswagen has agreed to pay US suppliers $1.2 billion to settle claims emanating from the "Dieselgate" pollution scandal, the firm and suppliers said late Friday.

This Week in History
75 years since one of Holocaust's worst massacres
Photo: DPA

On Thursday, German president Joachim Gauck spoke in Kiev 75 years after the Nazis slaughtered 33,771 Jews during one of the worst single massacres of the Holocaust.

Six things you need to know about troubled Deutsche Bank

Shares in Deutsche bank plunged on Friday morning, dragging down other European banks and markets worldwide. Here are six things to know about Germany's biggest lender.

Deutsche Bahn jacks up prices for first time in 3 years
Photo: DPA

Germany's main rail provider, the state-owned Deutsche Bahn (DB), announced on Friday that it will raise prices on long-distance train travel.

Baby found alive in suitcase with skeleton in Hanover
File photo: DPA.

A baby has been found alive, along with the skeleton of another infant inside of a suitcase in Hanover, police reported on Friday.

Morocco to speed up repatriation of illegal migrants
Photo: DPA

Morocco has agreed to streamline the procedures for the repatriation of citizens living illegally in Germany, the royal court said late on Thursday.

890,000 refugees arrived in Germany last year - not 1.1m
Photo: DPA

Previous reports had suggested that around 1.1 million people entered Germany to seek asylum last year. But now the German government has confirmed the number was actually lower.

Racist attacks cast cloud over Dresden Unity Day planning
A police vehicle in Dresden. Photo: DPA.

As Dresden prepares to host Germany’s national Unity Day celebrations on Monday, the capital of the eastern state of Saxony is upping security after a mosque was targeted by a homemade bomb.

Sinking Deutsche Bank stock sends shock across Europe
Photo: DPA

Shares in Germany's biggest lender Deutsche Bank plummeted on the Frankfurt stock market on Friday, dragging other European banks and global markets down with it, after reports some customers were pulling money out.

The Local List
10 things you never knew about German reunification
Reunification celebrations in Hanover in 2014. Photo: DPA

With German Unity Day (October 3rd) happening on Monday, Germans are looking forward to a three-day weekend. But did you know these facts about reunification and German Unity Day?

Sponsored Article
The Inner Circle: the secret to dating in Berlin
Germany's 10 most Instagram-able places
Sponsored Article
Why Jordan is the ‘Different’ East
Lifestyle
15 pics that prove Germany is absolutely enchanting in autumn
Lifestyle
10 German films you have to watch before you die
Lifestyle
6 things about Munich that’ll stay with you forever
Sponsored Article
Retiring abroad: ensuring your health is covered
Lifestyle
10 pieces of German slang you'll never learn in class
National
Seven great reasons to stay in Germany this September
National
Ouch! Naked swimmer hospitalized after angler hooks his penis
National
Six reasons why Berlin is now known as 'the failed city'
Sponsored Article
Life in Jordan: 'Undiscovered treasure'
National
15 tell-tale signs you’ll never quite master German
Culture
7 American habits that make Germans very, very uncomfortable
Sponsored Article
The Inner Circle: the secret to dating in Berlin
Rhineland
Story of a fugitive cow who outwitted police for weeks before capture
Culture
Eleven famous Germans with surnames that'll make your sides split
Lifestyle
The best ways to get a visa as an American in Germany
Gallery
Germany's 17 Olympic gold medals in pictures
14 facts you never knew about the Brandenburg Gate
Society
Ten times Germans proved they really, really love beer
National
Six things you need to know when moving to Germany
Travel
These 10 little-known German towns are a must see
International
German scientists prove birds can sleep while flying
Technology
London v. Berlin: Which is better for startups?
Lifestyle
13 mortifying mistakes German learners always make
6,718
jobs available
Toytown Germany
Germany's English-speaking crowd