Germany's E.ON sees H1 earns rise sharply

AP News
Posted: Aug 13, 2012 10:32 AM
Germany's E.ON sees H1 earns rise sharply

BERLIN (AP) — German utility E.ON stuck to its results forecasts for the year as it posted a sharp increase in first-half earnings thanks to new gas deals with Russia.

The company said first-half net income attributable to shareholders rose to €2.9 billion ($3.6 billion) during the period, up from €691 million last year. The company did not provide second-quarter figures.

Overall net income was up to €3.1 billion from €948 million during the first half of 2011.

The increase in profit came largely due to a new agreement on long-term gas supply contracts with Russian gas producer Gazprom OAO, the company said.

That helped offset lower sales from its power-generation segment, which has suffered from Germany's decision to shut down its nuclear power stations and an overall decline in output in the company's generation portfolio in Europe.

Two of E.ON's nuclear reactors were among eight power plants that were switched off in Germany last year after Japan's Fukushima disaster, prompting the company to pursue cost savings and expansion abroad.

"'Our solid first-half results demonstrate that we're meeting our existing challenges decisively," chief executive Johannes Teyssen said. "We successfully renegotiated our gas-procurement contracts, and the transformation of our company through our E.ON efficiency-enhancement program is moving forward according to plan."

The company said that the absence of the one-off effect of Germany's accelerated phaseout of nuclear energy, recorded in the second quarter of 2011, had a positive impact on first-half earnings to the tune of €1.5 billion.

Overall sales were up 23 percent to €65.4 billion during the period, compared to €53 billion in the first half of 2011. Earnings before interest, taxes, depreciation and amortization were up 55 percent to €6.71 billion from €4.33 billion the previous year.

E.ON shares were the top performer on Frankfurt's main DAX exchange early in the day, trading up 1.9 percent, but by afternoon trading they were up only 0.33 percent to €17.88.