FRANKFURT/ESSEN, Germany (Reuters) - Innogy’s struggling British arm npower could be wound down, sold or merged with the local business of rival E.ON, its finance chief said on Wednesday, as a turnaround of one of the UK’s big six energy providers is not yet in sight.
Npower has been restructuring for years, hit by technical problems related to billing, rivals eating into its market share and a price cap on tariffs imposed by British regulators.
The unit may end up with German rival E.ON, which last year agreed a deal to break up Innogy with its German parent RWE, but a major restructuring or sale could happen before the transaction is expected to close later this year.
“We don’t exclude any option. Of course, the strategic option ... i.e. selling the customer book and winding down the operations of the business .. is one of various options,” Innogy Chief Financial Officer Bernhard Guenther told analysts after presenting 2018 results.
He said winding down npower would cost hundreds of millions of pounds, adding attractive offers for npower would be welcome after a deal to merge the unit with SSE’s local business fell through.
E.ON, which also released 2018 results on Wednesday, pointed to tough competition in Britain too as one of the reasons why it expects operating profit at its retail unit to fall well below 400 million euros ($452 million) this year.
This compares with 413 million in 2018.
Innogy expects retail profits to fall even more to 300-400 million in 2019, down from 654 million.
Between them, the firms lost about 857,000 gas and electricity customers in Britain last year.
E.ON Chief Executive Johannes Teyssen, during a call with analysts, signaled a large restructuring was on the cards should E.ON end up owning npower, which made an operating loss of 72 million euros in 2018.
“We at E.ON never entertain for the longer-term a loss-making business and we will do our utmost to turn it around as quickly as possible. But quite obviously from the outside it’s nothing to be done overnight,” he said.
Shares in E.ON were down 2.6 percent at 1520 GMT, while Innogy’s were down 0.5 percent.
At a group level, E.ON forecast adjusted operating profit of 2.9-3.1 billion euros this year, versus 3 billion in 2018. At Innogy, it is expected to fall 13 percent to about 2.3 billion euros in 2019.
Additional reporting by Vera Eckert and Matthias Inverardi; Editing by Emelia Sithole-Matarise and Mark Potter
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