German E.ON’s profits tumble year on year in Q1-Q3 2011
After seeing its profits plummet in the first nine months of the year, German utility E.ON is preparing a lawsuit against the German government's decision to phase out all nuclear power by 2022, CFO Marcus Schenck said at E.ON's quarterly press conference on Wednesday.
E.ON's adjusted profits for the period from January to September 2011 amounted to €1.6bn, a fall of 64% compared to the same period last year.
Schenck added that the planned lawsuit will be aimed at receiving compensation for the company's losses in its nuclear business, but did not comment on the details. In September, a German court already found in favour of E.ON in a case against Germany's nuclear fuel tax, granting the company a rebate. The tax was initially introduced as compensation for extending the lifespan of the nuclear reactors, but was kept despite the nuclear phase-out decision, which sparked outrage among nuclear plant operators.
Schenck said E.ON's earnings continued to be hit by several factors, including the government's decision to phase-out all nuclear power and losses in the gas sector due to high-priced long-term gas-supply contracts.
For the same reasons, E.ON slid into the red for the first time in the company's history in the second quarter of 2011, losing €382m (see ESGM 10 August 2011).
As a consequence, E.ON aims to reduce its running expenses from the current €11bn/year to a maximum of €9.5bn/year by 2015.
According to Schenck, the most profitable business units have been the renewable energy sector, the gas upstream business and the company's division in Russia. The strong decline in profit also came despite a 24% year-on-year rise in gas and a 20% increase in electricity sales volumes over the first nine months of 2011.
In August, E.ON announced extensive restructuring measures, including the elimination of up to 11,000 jobs within the group. It also plans to sell its transmission system operator (TSO), Open Grid Europe (OGE), which owns the major part of the natural gas network in the NCG market area (see ESGM 4 October 2011). E.ON is currently looking for a buyer to take the helm of the gas grid in 2012.
E.ON confirmed its expectations for its overall profits in 2011, which the company had lowered significantly in August. Schenck said E.ON expects adjusted profits to amount to €2.1-2.6bn for 2011, which translates into an almost 50% year-on-year decline, down from €4.9bn in 2010. JR
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