* E.ON to close 13 GW of plants, Enel to mothball 8 GW
* European power industry crisis to persist
* Enel, E.ON expect core profits to fall further
* Both firms look to emerging markets for growth
(Adds details on asset sales, dividends, analysts' comment,
By Christoph Steitz and Stephen Jewkes
DUESSELDORF, Germany/MILAN, March 12 E.ON
and Enel, two of Europe's largest power
utilities, said on Wednesday they plan to shut more plants and
cut costs, 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 fossil-fuelled thermal plants redundant and
leading to a collapse in wholesale power prices.
E.ON, Germany's largest utility, nearly halved its dividend
to 0.60 euros ($0.83) per share on 2013 earnings, down from 1.10
euros, and said it will shut down 13 gigawatts (GW) of capacity,
equivalent to about 13 nuclear plants and more than a quarter of
its entire European capacity.
Italy's biggest utility Enel, which also owns 92 percent of
Spanish group Endesa, said it would mothball 8 GW of
capacity in its home market and Spain, and trim its dividend to
0.13 euros per share from 0.15 paid on 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.
Some 15 years after liberalisation of Europe's power
markets, companies have been left facing the need to find a new
business model due to increased regulation and a changing energy
mix which has become increasingly biased towards low-carbon
types of electricity generation.
The crisis caused French group GDF Suez to book a
15 billion-euro charge on its power business this month, while
German rival RWE 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.
The Italian state-controlled utility plans to invest 25.7
billion euros in 2014-18, of which 57 percent will go to growth
markets. It will also plough 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 though it 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.
Adding to their problems many of Europe's utilities are
still trying to shake off the legacies of an acquisitions mania
that gripped the sector before the financial crisis in 2008, and
are now having to sell assets and find cost savings to help cut
debts and preserve their investment grade credit ratings.
With plans to raise 4.4 billion euros from asset sales and
make cost savings of 5.8 billion euros in 2014 alone, Enel said
on Wednesday it would at least be able to raise its dividend
payout ratio, to 50 percent of net profits from 40 percent.
Deutsche Bank said in a note that while Enel's overall
results were in line with market expectations, the news on
dividend policy and cost cutting was positive.
"Also positive (is the fact) they remain committed to
deliver on disposals," the note said.
Enel stock was up 1.2 percent at 3.87 euros by 1540 GMT,
when E.ON was up 3.24 percent at 13.86 euros and the Stoxx
Europe 600 utilities sector index was up 0.18 percent.
(Additional reporting by Geert De Clercq; Editing by Greg