Eon earnings down by 30 per cent but says it is “past the worst”

Eon's earnings in 2011 were 30 per cent lower than the previous year, but the company said it was "past the worst" in a restructuring and forecast better figures fo2 the coming two years.

Earnings before interest, tax, depreciation and amortisation (Ebitda) in 2011 were €9.3 billion, compared to €13.3 billion the previous year. It expects that figure to rise to €10.6 billion in 2012.

The company was hit hardest by a €2.5 billion bill relating to the shutdown of nuclear stations in its home market in Germany, and that country’s nuclear fuel tax. But it also saw a fall of €1 billion in earnings from its European power business and a fall of €0.7 billion in earnings from its gas wholesale business.

“The business environment for conventional generation has deteriorated in most markets”, the company said, noting markedly narrower margins and lower utilisation of conventional power stations in southern and central Europe and the Benelux countries.

On the gas business, the company said “The extraction of new unconventional reserves has massively altered the global gas market, resulting in oversupply and putting the business under enormous pressure.” As a result, the company said it would combine its gas supply, gas storage, liquefied natural gas and trading businesses.

Renewables, new markets like Russia, and gas production will be mainstays of the business by 2013. But the company wants to cut its capital requirements, so it will no longer be the sole operator and owner of renewables projects.

The sale of Central Networks in April last year took divestments to €9.2 billion but the company intends to take that total to €15 billion by the end of 2013.

Sales in the UK fell by 2 per cent, from £7,579 million in 2010 to £7,422 million last year, but the company said that was mainly following disposal of the networks business and sales in its retail business increased.

Eon believes the UK’s Electricity Market Reform will be completed by the end of 2014.