* Q1 EBITDA 3.16 bln eur vs 3.2 bln poll
* Underlying net income 1.22 bln eur vs 1.19 bln poll
* Keeps 2014 outlook
* Shares indicated 0.2 pct lower
(Recasts, adds details on capacity markets, background)
By Christoph Steitz
FRANKFURT, May 13 Germany's biggest utility E.ON
on Tuesday called for compensation for its
loss-making gas-fired power stations after posting a 12-percent
fall in first-quarter earnings.
Germany's utilities are under pressure from expansion of
renewable energy capacity which is threatening the business
model of their conventional power plants, most notably gas.
Even though loss-making, gas-fired power plants are needed
for constant or "baseload" energy supply, which variable solar
or wind energy sources cannot provide.
To keep plants on standby, Germany's power groups are
calling for adequate compensation payments as part of a
so-called capacity market, which would cover their losses.
"I'm confident that the German federal government will soon
set a course that will enable conventional power plants to
provide a continuous, reliable backup for the intermittent
output of renewables and ensure that our economy and population
have a reliable supply of electricity 24/7," Chief Executive
Johannes Teyssen wrote to shareholders.
This so-called capacity mechanism is already being discussed
or implemented in other European states, including France and
Britain, which are also faced with weak wholesale prices that
have made gas-fired plants unprofitable.
E.ON's first-quarter earnings before interest, tax,
depreciation and amortisation (EBITDA) came in at 3.16 billion
euros ($4.35 billion), the group said, versus a 3.2 billion
average forecast in a Reuters poll.
The decline was mainly due to a mild winter in Europe and
weak wholesale prices.
E.ON's comments echo those from peers GDF Suez and
EnBW, which also took a hit from mild weather in the
E.ON, whose market value has more than halved since 2010, is
closing or mothballing more than a quarter of its plant capacity
in Europe and has sold about 20 billion euros ($27.51 billion)
in assets in response to a crisis exacerbated by weak energy
demand across the continent.
"E.ON has reported Q1 numbers that are slightly below market
expectations but with guidance confirmed and few surprises in
the numbers we expect a muted market reaction today," RBC
Capital Markets analyst John Musk wrote, rating the stock
The company kept its forecast for 2014, still expecting
EBITDA of 8-8.6 billion euros and underlying net income of
Also suffering under 31.14 billion euros of net debt, E.ON,
which was formed in 2000, is mulling whether to sell even more
assets, most notably in Italy and Spain, sources told Reuters
earlier this year.
($1 = 0.7270 Euros)
(Editing by Victoria Bryan and Jason Neely)