Eon UK sales up while supply profit remains stable

Energy supplier Eon has said its supply profit margin in the UK is in line with last year, despite higher sales.

It published details of its financial performance for the first six months of 2013 in the UK, which shows that the company’s turnover increased from £3.99 billion in the first half of 2012 to £4.37 billion compared with the same period in 2013.

Although earnings before interest, taxes, depreciation and amortisation (Ebitda) rose in the UK from £238 million to £273 million in the same period, the company’s overall profit margin saw an increase of just 0.28 per cent.

Tony Cocker, Eon UK chief executive, said: “The colder start to the year meant more energy has been used, so sales are up; the costs we control have come down at a time when those we don’t control are continuing to rise; meaning that ultimately whilst our profit has increased slightly our overall supply profit margin is very much in line with last year.”

Eon’s generation, upstream and other activities in the UK saw a decrease in Ebitda from £399 million in the first half of 2012 to £159 million in the first half of 2013.

According to Eon, this reduction was primarily due to the changes in the UK generation portfolio such as the closure of the Kingsnorth Power Station at the end of 2012 under the European Union’s Large Combustion Plant Directive and the conversion and commissioning of Ironbridge power station from coal to biomass.

In addition, the company says its gas-fired power stations continue to operate at a very low profit margin due to market factors and its entire fossil fleet continues to face higher costs following the removal of free carbon credits in 2012.

Eon said its investment levels remain high reflecting the completion of major projects including London Array which was officially opened by Prime Minister David Cameron on 4 July.