Eon first quarter profits up despite drop in revenues

Profits from Eon’s UK business were up in the first quarter of 2016, despite a significant fall in sales due to weak demand for both gas and power.

Revenues decreased by almost 15 per cent on the same quarter in 2015, falling from roughly €3.1 billion (£2.4 billion) to around €2.6 billion (£2.1 billion).

At the same time EBITDA rose by around 16 per cent from €252 million (£187 million) to €292 million (£225 million). The increased profits were attributed to “lower costs in conjunction with government-mandated energy-efficiency measures”.

The results of Eon’s British business mirrored those of the wider group. EBITDA increased by €277 million (£219 million) to €3.1 billion (£2.5 billion), whilst sales fell by about €3.9 billion (£3.1 billion) to €27.1 billion (£21.4 billion) – a 12 per cent decrease.

The decline was mainly driven by falling revenues from Eon’s conventional generation activities due to lower market prices and the decommissioning of plants.

The extra revenue allowed Eon to reduce its net debt by €1.1 billion (£900 million) to €26.6 billion (£21 billion). The supplier said it is working to maintain its credit ratings of Baa1 with Moody’s and BBB+ with Standard and Poor’s, after both placed the company on review for a possible downgrade.

Eon chief executive Johannes Teyssen said: “These results are no more satisfying than those of any company in our industry. But they also demonstrate that Eon can deliver a solid performance in a difficult environment. This gives us strength for the transformation ahead. 2016 will be a transitional year.”

Eon has been spinning off its conventional generation and market trading units into a separate business called Uniper. It has effectively been operating independently of the rest of Eon since the beginning of 2016. Shareholders are due to vote on the division at their annual meeting in June before Uniper is listed on the stock market.

In March Eon posted its full-year results for 2015, showing a record loss of almost €7 billion (£5.5 billion) due to a huge write-down its generation assets.