E.ON burned with big loss in first half

Frankfurt (AFP) – German energy giant E.ON on Wednesday reported 3 billion euros ($3.34 billion) in losses over the first half of 2016 as it wrote down the value of traditional power infrastructure.

E.ON subsidiary Uniper, which brings together the firm’s non-renewable power operations, booked provisions and impairment charges on its power plants and gas storage facilities totalling 3.8 billion euros.

That weighed on the group as a whole, which reported underlying profit as measured by EBITDA of 2.9 billion euros — down 12 percent on the same period in 2016 — on revenues of 20.25 billion.

But the firm insisted it was on course to meet its profit targets for the year as a whole.

“E.ON delivered solid first-half results in a persistently difficult environment,” chief financial officer Michael Sen said.

In its forecast, the firm said it expects underlying profit as measured by EBIT of between 2.7 and 3.1 billion euros in 2016, for a net profit of between 0.6 and 1.0 billion.

Uniper is to be spun off in a separate stock-market listing in September as part of E.ON’s long restructuring efforts, which saw the company report a 7.0-billion-euro net loss in 2015.

“Nothing more stands in the way” of the flotation after shareholders voted almost unanimously in favour at a June meeting, chief executive Johannes Teyssen said.

Like other big power utilities, E.ON has felt the pinch as Germany’s government mandated an expensive total shutdown of nuclear power and offered heavy subsidies to renewables, squeezing margins for traditional forms of electricity generation.

The company is also carrying a debt burden of 24.8 billion euros, up from 21.3 billion at the end of 2015 — an increase the firm said was largely due to increased pension provisions as interest rates declined further.