13059
E.ON in Multi-Billion Loss
World Economy

E.ON in Multi-Billion Loss

Massive impairments and low oil prices have pushed electricity giant E.ON into the red. The multi-billion loss comes as the country’s switch to renewable energy continues to put pressure on conventional utilities.
Germany’s largest power supplier said Wednesday that it suffered a net loss of 3.2 billion euros ($3.42 billion) in 2014 as massive impairments, plunging oil prices and a changing energy landscape continue to drag down profits, DW reported.
The company’s earnings before interest, taxes, depreciation and amortization (EBITDA ) dropped 9 percent to 8.3 billion euros from 9.2 billion euros the year before. In the same period, underlying profit shrank 24 percent to 1.6 billion euros from 2.1 billion euros.
In a letter to shareholders, CEO Johannes Teyssen said the poor performance was “within the anticipated range.” The group had already raised the red flag last year after it booked 4.5 billion euros in fourth-quarter impairment charges, chiefly at its generation business in Italy, Sweden and the UK.
Low oil prices and a weak euro also left a dent in E.ON’s coffers.
“Extremely low oil prices, adverse changes in currency rates, and a further decline in power prices are having a significant effect on our business,” said CFO Klaus Schafer in a press release.
“Considering the continued difficult market environment in many countries, we’re generally satisfied with our 2014 results,” he added.
  Focus on Renewables
The shortfall is the biggest in the company’s history and comes as the Dusseldorf-based energy giant is scrambling to meet Germany’s goal to wean off conventional energies and switch to renewables by 2050. The energy transition is proving a challenge for the entire industry, with another German energy giant, earlier this week.
Last year, E.ON announced plans to split into two in 2016, spinning off its conventional power activities to focus on green energy, as part of its “E.ON 2.0” restructuring strategy.
That move was bolstered by Wednesday’s earnings report, which saw the group’s wind and solar business boast a 20-percent increase, outperforming its other segments.
However, Schafer said that the firm’s forecast for the current year is “cautious,” warning that he expected its power as well as its exploration and production businesses to post earnings declines.
“We expect E.ON’s 2015 EBITDA to be between 7 billion euros and 7.6 billion euros and underlying net income to be between 1.4 billion and 1.8 billion.”
E.ON said strategic renewal will be its “dominant theme in 2015,” adding that its focus would lie squarely on renewable, energy networks and customer solutions. Still, “the conventional energy world will continue to be indispensable for decades to come,” CEO Teyssen stressed in the press release.
He’s expected to propose a divide of 50 cents per share at the annual shareholders meeting on May 7, corresponding to a total dividend payout of about 1 billion euros and a payout ratio of 60 percent of underlying net income.

Short URL : http://goo.gl/bY8EK7

You can also read ...

Cyber threats are ever-evolving.
The White House released a report that found that the economic...
Global Investors Target Zimbabwe Energy Sector
Zimbabwe has become a magnet for billionaire global firms such...
BSP said the planned RRR cuts are part of the bank’s financial market reforms.
The Bangko Sentral ng Pilipinas said it was reducing banks’...
FAO regional representative Julio Berdegue (R), and the deputy regional representative Eve Crowley.
Identifying territories where rural poverty is most entrenched...
Asean Labor Flows Hit a Wall
Tighter restrictions on foreign labor in Malaysia and Thailand...
Lagarde Backs Creation of European Monetary Fund
International Monetary Fund chief Christine Lagarde has no...
The country’s GDP grew by 3.2% in 2017 but will  edge down in the coming years.
A report by the International Monetary Fund showed Sunday that...
Baby-boomers will start turning 75 or older in 2022, which is expected to trigger a surge in health care and nursing care costs.
Amid stalling inflation and ballooning government spending,...

Trending

Googleplus