E.ON’s Earnings Up, but Slog Through Restructuring Continues


E.ON reported nine-month operating income of EUR 4.0 billion and adjusted EBITDA of EUR 8.8 billion. Both are up substantially from 2011, as we expected, and remain in line with our full-year projections. Management reaffirmed its 2012 earnings guidance of EUR 4.1 billion-4.5 billion and EBITDA guidance of EUR 10.4 billion-11.0 billion. Management also reaffirmed its intent to pay a EUR 1.10 per share dividend.

However, management said it was reviewing its 2013-15 outlook, given increased uncertainty since it issued its outlook in March and reaffirmed it in May. Management initially forecast 2013 net income of EUR 3.2 billion-3.7 billion and EBITDA of EUR 11.6 billion-12.3 billion. Management also forecast an annual earnings per share growth rate exceeding 10% in 2011-15. Our projections were at the high end of those ranges, and we will review our outlook for a possible cut.

Although the nuclear shutdowns in Germany are behind it and the firm’s wholesale gas trading margins have improved, E.ON still had to take a EUR 1.2 billion impairment charge in the quarter across several of its businesses. E.ON also in November made two moves that demonstrate its intent to sharpen its focus and pare back its growth capital spending.

The company announced it plans to sell its 34% stake in Finnish energy company Fennovoima as part of its plans to exit the Finnish market and focus on the Danish and Swedish markets. Fennovoima had proposed building a new nuclear plant with E.ON’s help. E.ON also sold its joint venture interest in Horizon Nuclear Power, which targeted new nuclear plant development in the United Kingdom.


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