UPDATE 3-Weak European economy takes toll on power firm E.ON

Wed Jan 30, 2013 1:03pm EST

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* 2012 EBITDA 10.8 bln euros, in line with Reuters poll

* Examines profitability of 11 GW power plant capacity

* Now aims for total asset sales of 20 billion euros (Adds detail on 2012 results, asset sales)

By Christoph Steitz

FRANKFURT, Jan 30 (Reuters) - E.ON, Germany's largest utility, said it would rake in less profit, close plants and sell more assets to cope with falling demand for energy in recession-hit Europe.

Protracted economic stagnation has left energy providers struggling with low prices and excess capacity and there seems little prospect of a rapid recovery.

"It's not going to get easier for E.ON, and this holds true for all utilities in Europe," E.ON Chief Executive Johannes Teyssen said on Wednesday.

He said E.ON was extending the total volume of its asset sale programme by roughly 3 billion euros ($4.1 billion) to a total of 20 billion euros, saying it aimed to sell its stake in uranium enrichment company Urenco as well as some stakes in local utilities.

E.ON has sold assets worth about 17 billion euros but is still suffering from a 36-billion euro debt pile and a weakening European power market.

The International Energy Agency (IEA) expects primary energy demand in the European Union to decline by 2 percent in the 2010-2015 period, compared with a 10 percent rise globally.

European manufacturing industry, a key consumer of electricity and gas, has seen a modest improvement in activity in recent weeks, but remains in recession.

European sector leader GDF Suez warned in December that weak power demand would curb its profits and investments.

WEAK GROWTH PROSPECTS

E.ON, also grappling with Germany's decision to phase out nuclear power, said earnings before interest, tax, depreciation and amortisation (EBITDA) were likely to fall to 9.2-9.8 billion euros this year from 10.8 billion in 2012.

The forecast compares with an average analyst estimate of 9.7 billion, according to Thomson Reuters Starmine.

The company said underlying net income was 4.5 billion euros in 2012, also in line with analyst expectations, benefiting from fewer writedowns and renegotiated gas contracts. That compared with 2.5 billion euros in 2011.

"We see little prospect of growth from the guided range for 2013 over the remainder of the decade as profitability from European generation markets dwindles," said John Musk, an analyst at RBC Capital Markets.

E.ON said capital spending would fall to about 4.5 billion euros in 2015 from around 7 billion in 2012 and that it may decommission about 11 gigawatts (GW) of plant capacity by 2015.

E.ON confirmed its dividend of 1.10 euros per share for 2012, a move which traders said supported the stock that had dropped 30 percent since mid-September, underperforming a 7-percent fall in an index of European utilities.

Shares in the company traded in positive territory for most of the day but closed down 0.8 percent.

($1 = 0.7370 euros) (Additional reporting by Vera Eckert; Editing by Tom Pfeiffer)

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