German utility E.ON lowers 2013 outlook
- Associated Press
- November 13, 2012 - 3:34 AM
BERLIN - German electricity and gas supplier E.ON AG on Tuesday lowered its earnings forecast for next year because of economic uncertainties and changes in the energy industry, an announcement that caused its shares to tumble.
The reduced forecast came as the utility, which is based in Duesseldorf, reported a (EURO)179 million ($228 million) loss for the third quarter.
E.ON said the earnings figure was hit by charges totaling (EURO)1.2 billion at various units, and pointed to "a generally deteriorated business environment along with regulatory intervention."
A year earlier, E.ON made a net profit of (EURO)173 million. Third-quarter tevenues rose to (EURO)28.23 billion from (EURO)24.46 billion.
E.ON's shares dropped 9.3 percent to (EURO)15.00 in early trading in Frankfurt.
The company said it remains on track to meet its target for this year of underlying net income between (EURO)4.1 billion and (EURO)4.5 billion, and still plans to pay a dividend of (EURO)1.10 per share for 2012.
However, it said it is reviewing its longer-term targets. The previous 2013 forecast for underlying net income of (EURO)3.2 billion-(EURO)3.7 billion "no longer seems achievable" in light of the "the substantial economic uncertainties and the structural changes in the energy industry," it said. The company also said it would review longer-term statements regarding its performance in 2015.
CEO Johannes Teyssen said E.ON faces "huge challenges," particularly in its electricity generation business, and added that the company is "exploring whether to close some assets." He said one problem is that gas-fired generators "have become barely profitable to operate."
For the first nine months of the year, E.ON said its net earnings rose to (EURO)2.73 billion from the previous year's (EURO)864 million. Revenue increased to (EURO)93.63 billion from (EURO)77.51 billion.
For that period, E.ON credited an improvement in its wholesale gas business; the effect last year of costs stemming from Germany's decision to speed up its phaseout of nuclear energy; and new gas-fired generating units in Russia.
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