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E.On cites 'challenging' market as price cap impacts customer solutions unit

Image: E.On

Image: E.On

E.On has seen a 12% decline in half-year earnings, with its customer solutions unit being the hardest hit as earnings halved.

The German energy giant released its H1 financial results disclosure this week, reporting earnings before interest and tax (EBIT) of €1.7 billion (£1.5 billion) for the first six months of 2019, down from €1.9 billion (£1.7 billion) in H1 of 2018.

E.On’s customer solutions unit saw its EBIT almost halve year-on-year, from €477 million to €240 million. This is despite E.On investing some €131 million in the unit and sales rising by €0.6 billion to €12.1 billion.

Marc Spiker, chief financial officer of E.On, said decline is primarily due to the regulatory price cap which is making the market in Great Britain “particularly challenging”.

E.On’s renewables and networks units had more stable performances, with its renewables sales climbing from €741 million to €807 million. Increases in output due to the commissioning of offshore wind farms in the UK and Germany and an onshore wind farm in the US were the primary reason for the renewables unit’s strong performance, E.On said.

Its networks division saw sales increase remain steady, coming in at €4.5 billion. This is in comparison to H1 2018 sales of €4.4 billion, originally reported by E.On as €6.1 billion and since adjusted to remove income and expenses resulting from Germany’s Renewable Energy Law’s feed-in scheme.

Investment in its networks business also grew, rising by €78 million to around €650 million, representing half of E.On’s investments.

The results came as no surprise, being in line with E.On’s planning, Spiker said, with the utility reaffirming its forecast for the 2019 financial year.

“We continue to expect our 2019 adjusted EBIT to be between €2.9 and €3.1 billion and our 2019 adjusted net income to be between €1.4 and €1.6 billion,” he continued.

E.On’s forthcoming asset swap with RWE has also been confirmed to be ‘right on schedule’, with E.On confident the transaction will be closed in September.

First announced in 2018, the asset swap will see E.On acquire and integrate innogy and RWE take on E.On’s renewables unit.

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