Germany’s top power utility, E.ON, has announced a loss of $10.1bn (€9.3bn) for the first nine months of the year after booking an impairment charge of $6.6bn (€6.1bn) against fossil fuel power and energy trading unit Uniper.

The new company had been separated from its renewables business and floated independently in Germany last month.

In a trading statement issued on Wednesday, E.ON spelled out that Uniper’s share price has risen by more than 20 per cent since the spin-off as investors “see signs of recovery in the conventional energy world”. But, the German utility said, it has had to adjust the book value of Uniper to reflect its market capitalisation.

The company has preferred to highlight its adjusted figures to explain the $10.1bn loss, saying the net loss is “entirely attributable to Eon’s discontinued operations and is not cash-effective”.

Adjusting earnings before interest and taxes (Ebit) at E.ON’s “core” business is up 13 per cent year on year to €1.9bn, the company said. The core business refers to its energy networks, renewables business and customer solutions division.
Uniper sign
Eon chose to spin off its conventional power assets in response to Germany’s Energiewende, a government policy shift towards renewable energy generation.

Despite the hefty net loss, E.ON has reaffirmed its full year forecast. It expects full year adjusted net income to be between $0.6bn and $1.1bn.

Johannes Teyssen, Eon’s chief executive, said: “To be successful, we need to be closer to our customers. We’re going to become leaner and more agile, which will enable us to successfully position ourselves, even in the face of keener competition. We’re going to give more decision-making authority to those employees who work closely with our customers.

The company’s cost-cutting strategy, project “Phoenix”, intends to reduce costs by $437m, but there has been no recent statement on potential job losses. “Our goal is to secure the company’s future in the long term, despite further fundamental changes,” explained Teyssen.

The company also halved its renewable energy investment pipeline to 5 GW from 10 GW last year as changing regulation makes the outlook for large projects less certain, the head of E.ON’s renewables unit said.

In summer of last year E.ON had a pipeline of 10 GW of projects, of which 60 per cent was in North America and 40 per cent in Europe, but the utility has scaled that back to 5 GW, of which 80 per cent is in the United States and 20 percent in Europe.

Michael Lewis, chief executive of E.ON Climate & Renewables (ECR), the renewables unit of the new E.ON after it split off fossil fuels into Uniper, told Reuters the pipeline numbers have come down since the firm is trying to focus on those projects which it believes have a good chance of coming to fruition.

“With the move towards a competitive tendering system across most countries, now only the best projects are going to win,” Lewis said on the sidelines of the New York Times Energy for Tomorrow conference in Paris.

“If we perceive a need to move into new markets because growth opportunities are not there in our traditional markets then we will do that, but for the time being we do not see that,” Lewis said.

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