Eon profit down 34% in Q1 on grid fees and procurement costs

Eon, the German utility, said profit fell by a third in the first quarter on rising costs, though the company said its earnings forecast for the full year remained unchanged.

The company said earnings before interest and tax came to just over €1bn, 34 per cent below the prior year figure, due to higher grid fee and higher procurement costs for power and gas in Germany and the UK. It also pointed out that one of its nuclear power stations, Brokdorf, had been offline for longer than expected after an overhaul.

But it said these factors would be “fully offset during the course of the year”.

Eon is in the throes of one of Germany’s biggest corporate restructurings, having last year spun out its fossil fuel power generation assets into a new company, Uniper.

Eon, which has been badly hit by Germany’s radical shift to renewables, recorded a net loss of €16bn for 2016, the largest in its history, and unveiled ambitious measures to reduce debt by €7bn through asset sales and by cutting 1,300 jobs.

As part of that, it carried out a capital increase in March which yielded €1.35bn. That helped it reduce its debt from €26.3bn at year-end 2016 to €24.7bn at the end of the first quarter.

Eon said earlier this year that its big loss in 2016 would be the “last to reflect the burdens of the past”, leaving it free to focus on its three core businesses – energy networks, customer solutions and renewables. But the first quarter results show that the company is still beset by challenges even after its spin-off and the radical measures it put in place to bolster its balance sheet.

Uniper, too, saw a decline in profits. Adjusted ebit in the first quarter fell 41 per cent to €514m, down from €871m a year ago, though revenues increased by 14 per cent to €22.3bn.

Christopher Delbrueck, chief financial officer said the first quarter had laid a “good foundation for the rest of the year and for us to meet our forecast”. The company reaffirmed its forecast for full-year adjusted ebit of between €0.9bn and €1.2bn and its plan to increase its dividend for 2017 by about 15 per cent.