E.on warns on profits despite jump in earnings | Business| Economy and finance news from a German perspective | DW | 13.11.2012
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E.on warns on profits despite jump in earnings

German energy group E.ON is making profits again after Germany's decision to phase out nuclear energy weighed on earnings. But the utility giant sees new clouds gathering as the energy landscape becomes more diverse.

E.ON posted an underlying net income of 4 billion euros ($5.07 billion) in the first nine months of 2012 as group sales increased to 93.6 billion euros from 77.5 billion euros in the same period of 2011, Germany's largest energy utility reported Tuesday.

Boosted by more favorable natural gas contracts and a number of one-off effects, the result beat market expectations and caused E.ON to maintain its outlook for 2012 of net underlying income to come in at around 4.5 billion euros. E.ON said it would pay a dividend of 1.10 euros to its shareholders.

However, the group's chief executive Johannes Teyssen said E.ON was facing major strains in energy production in Germany amid dwindling margins and preferential treatment of renewable forms of energy by the government.

In addition, weak demand for electricity in crisis-hit eurozone states had led to overcapacity in E.ON's main markets in Europe, driving down wholesale energy prices.

"We will continue to optimize our production portfolio and consider plant closures," Teyssen announced, as he warned on medium-term group profits. He said E.ON's previous 2013 forecast for underlying net income of 3.7 billion euros seemed no longer achievable. In addition, the utility was also checking its outlook for 2015.

A first foreboding of harder times to come for E.ON was a net loss of 179 million euros reported by the group for the third quarter. This added to investors' worries about the company's future outlook and sent E.ON shares down 9.5 percent in trading on Tuesday.

uhe/kms (Reuters, AP, dpa, dapd)