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May 8, 2013 5:22 pm
Eon reported a small drop in first-quarter earnings, reflecting lower margins in fossil-fuelled power generation and lower output.
Germany’s biggest utility said earnings before interest, tax, depreciation and amortisation dropped 5 per cent to €3.58bn in the first quarter, compared with €3.79bn a year ago.
A presentation on the company’s website said it was considering mothballing a gas-fired plant in Malcenize, Slovakia.
Eon has been hit by a combination of low wholesale electricity prices and high prices for imported gas, which has eroded the profits of many conventional gas-fired plants in Europe. It has also suffered from the rapid growth in renewable energy, which has privileged access to Germany’s transmission grids.
Eon said in the first quarter, its earnings from gas-fired generation stood at €5m – down 94 per cent on a year ago. The drop was “mainly driven by worsening marketing conditions,” it said.
“The economic situation of our legacy business in Europe, particularly in conventional power generation, remains difficult,” chief executive Johannes Teyssen said in a letter to shareholders.
The company has also been badly affected by Germany’s decision to abandon nuclear power by 2022. Nuclear power accounted for more than a fifth of its power generation in 2012, compared to 34 per cent for oil and gas. Eon earned €681m from nuclear generation in the first quarter, a 17 per cent increase on a year ago.
Eon said divestments reduced its earnings by €200m, while lower output and narrower margins in fossil-fuelled generation trimmed them by €100m compared to a year ago. It said earnings were positively affected by cost savings and higher profits from its renewables business.
Eon said it expected its full-year ebitda to be between €9.2bn and €9.8bn.
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