The chief executive of E.ON, Johannes Teyssen, has warned of more troubling times ahead, as the company announced its second consecutive record loss.
Essen-based E.ON reported a net loss of €7bn for 2015, down from a net loss of €3.1bn a year ago, with the disastrous write down of its conventional power assets largely to blame.
Chief executive Johannes Teyssen said that “our earnings situation in 2015 reflected, in particular, impairment charges of €8.8bn” on loss-making (gas and coal-fired) power plants.”
He acknowledged again the ‘very difficult’ conditions facing conventional power at the moment, with the energy giant continuing to suffer from low wholesale power prices and a surge in renewable capacity, adding that the turbulence would be “tougher and longer than anticipated”.
Referring to the recent reorganisation of E.ON into two independent companies with its power generation and energy trading business being spun off into a company called Uniper, Teyssen said the hard decisions being made will be of benefit later.
“The divestments we have taken improve our financial profile and enhance our flexibility to implement our strategy and reposition our company. We want to augment this impetus by successfully completing our new setup, as planned, this year.”
“This will give us a platform from which we can unequivocally devote all our energy to outperforming our competitors in the new and the conventional energy world.”
The one positive aspect is despite the loss, excluding write downs, underlying net income came in at €1.6bn. Earnings before interest, taxation, depreciation and amortisation was €7.6bn.
Power Engineering International asked company spokesperson Markus Nitschke wheter E.ON management had been somewhat complacent in anticipating the strength of the Energiewende.
Nitschke told PEi that this wasn’t the case pointing to the decision to split the business and other factors. “Since 2014 E.ON has invested more than €10bn in renewables and is today one of the mayor player in this sector globally. I think the company took the upcoming Energiewende seriously. Nevertheless there are approximately 40 GW of conventional power we have to deal with currently.”
The news comes a day after RWE posted similarly gloomy results with both utilities now awaiting a report from the government into nuclear clean-up costs, which could increase their liabilities for the future storage of atomic waste.
RWE press spokesperson Sabine Jeschke said yesterday, “Some political obstacles will be solved over time, although we do not know the final outcome yet. For example concerning the (ongoing) discussion on nuclear provisions. This will become clearer in the course of the year.”
Teyssen said E.ON’s numbers “reflect the far-reaching structural transformation that our industry is experiencing and that continues unabated in the current year”. He said the course ahead would be “tougher and longer than anticipated”.
David Cheetham of CFD and FX broker XTB.com told Power Engineering International, “E.ON, one of the world’s largest electrical utility providers, posted its biggest ever annual loss this morning after writing down the value of its coal and gas-fired power plants by billions of Euros. (Despite the spin-off decision) the path forward for the fossil fuel segment of the business appears rocky with German year ahead wholsesale power prices, a European benchmark, touching their lowest level in over a decade and indicating a 75 per cent slump from their 2008 peak.”
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