Strong Eon results lead to dividend boost

Utility giant ups predictions for 2017 profit and increases shareholder payouts

Eon has recovered from a poor first quarter of 2017 to post improved financial results for the second three months of the year.

The utility giant reported adjusted earnings before interest and tax (EBIT) of €1.8 billion (£1.6bn) on the back of revenue of €19.6bn (£17.7bn).

Second quarter earnings in Eon’s core businesses (energy networks, customer solutions and renewables) marked a 25 per cent improvement on last year’s figure for the same period.

However, currency fluctuations, reduced demand and declining customer numbers negatively impacted sales for Eon UK. A decline in Adjusted EBIT for this part of the business was also blamed on increasing costs from the installation of smart meters.

The improvement in overall group performance allowed Eon to adjust its full-year forecast. It now expects adjusted EBIT of €3.1bn (£2.8bn), up from €2.8bn (£2.5bn), with adjusted net income of €1.45bn (£1.3bn), up from €1.2bn (£1.1bn).

Eon also recorded that it has reduced its net debt by 18 per cent during the first half of the year.

As a result of its stronger financial position, the company announced increased dividend payouts to shareholders, starting from next year. Its payout ratio will rise from 50-60 per cent to a minimum of 65 per cent. In a statement to the market, Eon said its new dividend policy will be outlined in greater detail when it releases its full-year 2017 results.

Speaking to investors and analysts this morning, chief executive Johannes Teyssen also said he would present an updated growth and investment strategy when the company releases its 2017 results.

“For us, investments and dividends aren’t mutually exclusive,” said Teyssen. “We have the opportunity to increase both in the interest of our customers, employees, and shareholders. And that’s precisely what we intend to do. Additional investments will also lay the foundation for greater customer benefit, better products, more growth, and stable earnings streams in the future. All of this will benefit our shareholders as well. 

“We’re building a new, digital Eon for the future, by moderately increasing our growth investments, but at least as much by drawing on our employees’ creative ideas and entrepreneurial spirit. In the interest of our customers, our objective is to play a leading role in the digitalisation of the energy sector and to help shape the energy transition and ensure its success.”