REFILE-WRAPUP 1-European utilities E.ON, Enel to close power plants, cut dividends

Wed Mar 12, 2014 8:27am EDT

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(Refiled to correct two typographical errors)

* E.ON to close 13 GW of plants, Enel to mothball 8 GW

* European power industry crisis to persist

* E.ON cuts dividend to 0.60 euros/share, from 1.1 euros

* Enel cuts dividend to 0.13 euros from 0.15 euros/share

* Enel, E.ON expect core profits to fall further

By Christoph Steitz and Stephen Jewkes

DUESSELDORF, Germany/MILAN, March 12 (Reuters) - E.ON and Enel, two of Europe's largest power utilities, are to shut more plants and cut costs, they announced on Wednesday, joining rivals in warning that the industry crisis will weigh on profits for years to come.

Utilities across Europe have been taken by surprise by a surge in output from renewable energy sources, mainly solar and wind, making many gas and coal-fired thermal plants redundant and leading to a collapse in wholesale power prices.

E.ON, Germany's largest utility, cut its dividend to 0.60 euros ($0.83) per share for 2013, down from 1.10 euros, and said it will shut down 13 gigawatts (GW) of plant, equivalent to about 13 nuclear plants and more than a quarter of its entire European capacity.

Meanwhile Italy's biggest utility Enel, which owns over 92 percent of Spanish group Endesa, said it would mothball 8 GW of capacity in its home market and Spain, and cut its dividend to 0.13 euros per share from the 0.15 euros paid for 2012.

So far some 50 GW of gas-fired capacity in Europe has been closed or mothballed by 10 of the continent's biggest utilities in response to weak demand and the rise of renewable energy.

"Our conventional power plants are operating for fewer and fewer hours," E.ON's chief executive Johannes Teyssen told reporters on Wednesday.

"As a result, we, but also more and more other energy companies, are decommissioning conventional power plants before the end of their ... operating life," he said.

The crisis caused French group GDF Suez to book a 15 billion-euro charge on its power business last week, while German rival RWE earlier this month posted its first net loss since 1949.

E.ON said it expected earnings before interest, tax, depreciation and amortisation (EBITDA) of 8.0-8.6 billion euros ($11-$11.9 billion) this year, marking the third consecutive year of falling profits.

In its new 2014-2018 business plan, Enel said it expected core earnings before interest, tax, depreciation and amortisation (EBITDA) to fall back to 15.5 billion euros, having risen in 2013 to 17 billion euros from 15.8 billion in 2012.

One way for Europe's utilities to escape relatively weak energy demand on the continent is to expand abroad, a strategy pursued by both E.ON and Enel, with the latter planning to invest 25.7 billion euros in 2014-18, of which 57 percent will go to growth markets while also ploughing 6 billion euros into green energy unit Enel Green Power.

"Emerging markets have become the key drivers of global economic growth ... In mature markets the conventional model is under siege from distributed generation," Enel's chief executive Fulvio Conti said.

The shift of focus to emergency markets and green energy is expected to take core earnings to 18 billion euros by the end of the five-year plan, Conti told analysts.

E.ON, too, is expanding abroad, mainly in Turkey, Brazil and Russia, where it has invested nearly 10 billion euros in recent years, but has warned of currency headwinds in these markets, caused by political uncertainty and a massive outflow of investor money and markets outside Europe still account for just 6 percent of its core profit.

Enel stock was up 0.6 percent at 3.84 euros by 1150 GMT, when E.ON was up 0.22 percent at 13.455 euros and the Stoxx Europe 600 utilities sector index was down 0.11 percent. ($1=0.7212 euros) (Editing by Greg Mahlich)

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