E.On has seen a sharp increase in its sales and earnings thanks to last year’s takeover of innogy, including its UK based supplier npower.
The company’s Q1 results show that its sales increased to €17.7 billion from €9.1 billion in the same period in 2019. The inclusion of innogy in the Energy Networks segment helped sales grow from €2.2 billion to €4.7 billion, and similarly its Customer Solutions segment from €7.5 billion to roughly €14.4 billion.
As such, Energy Networks had an adjusted EBIT of about €1.1 billion in Q1 2020, €0.4 billion above the prior-year level. This was principally because of the inclusion of innogy’s operations, according to E.On, particularly in Germany.
The adjusted EBIT for Customer Solutions grew by €75 million year-on-year to €300 million. This was almost entirely due to innogy being included for the first time.
However, E.On did see a drop in its earnings between January and March due to unseasonably warm weather in some of its key markets, including the UK. As such, lower demand led a reduction in earning by “a figure in the low triple-digit million euro range".
In Q1, there has been little impact on the company’s financial performance from COVID-19, as lockdown and corresponding falls in demand were only brought in within the last few weeks of the period in the markets in which it operates.
The E.On Group has also announced an additional €500 million in investments for climate-friendly upgrades of energy infrastructure in the wake of COVID-19.
E.On SE CEO Johannes Teyssen said that the company wants to do its part to “spur economic recovery after the crisis".
“We see interesting and promising projects with our customers in areas like the digital economy and eMobility, to which we want to provide additional support. We believe that accelerating the modernization of environmentally friendly energy infrastructure is a particularly effective way to combine climate protection and local job creation.
"In addition to our already planned investments, we intend to make available €0.5 billion more over the medium term for these technologies of the future.”
Overall, the addition of innogy has helped the Group’s first-quarter adjusted EBIT to grow by €285 million to €1.5 billion. It’s adjusted net income grew to €691 million from €650 million in Q1 2019.
The results will be welcomed by the company, after the acquisition of npower in 2019 caused its net income to fall by 49% in its financial results for 2019.
The Q1 results follow many of the trends seen in E.On’s 2019 full year financials though, as they also saw many aspects of the company grow, but the UK customer base continue to struggle.
Since the company took over innogy, it has made a start of reorganising npower. Most recently, this combining E.On’s Industrial and Commercial unit with npower’s Business Solutions arm.
The acquisition also saw E.On cut 4,500 jobs as part of a major restructuring of npower.
Going forwards the Group has set its 2020 adjusted EBIT at between €3.9 and €4.1 billion, and its adjusted net income at between €1.7 and €1.9 billion. E.On has said that this takes into account the implications of the COVID-19 pandemic that are foreseeable today, but highlights that other risk may materialise as the year moves forwards.