DGAP-News: E.ON AG / Key word(s): Final Results
E.ON AG: E.ON making rapid progress implementing new strategy
09.03.2011 / 08:00
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E.ON making rapid progress implementing new strategy
- 2010 results: adjusted EBIT up 2 percent to EUR9.5 billion, adjusted net
income down 4 percent to EUR4.9 billion
- Debt reduced by EUR7 billion
- Dividend of EUR1.50 per share to be proposed for 2010 financial year
- 2011 forecast: adjusted EBITDA of EUR11.2 to EUR11.9 billion and adjusted
net income of EUR3.3 to EUR4 billion
At the presentation of E.ON's 2010 results, E.ON CEO Johannes Teyssen
announced that the company has already reached several milestones in
implementing its new strategy. By selling its Gazprom stake, gas network in
Italy, and power network in United Kingdom and by concluding other
transactions, E.ON has, since November 2010, already achieved almost EUR9
billion of its EUR15 billion divestment target. These funds are available
for debt reduction and investments. E.ON also made progress in its ongoing
internationalization. It commissioned a new gas-fired generating unit in
Russia and its tenth wind farm in just three years in the United States.
E.ON's 2010 adjusted EBIT was up by 2 percent to EUR9.5 billion, fully in
line with the company's forecast. Its sales were also higher, rising by 16
percent to EUR92.9 billion. E.ON achieved these increases even though in
2010 it divested assets with earnings of roughly EUR800 million.
E.ON's solid earnings performance was driven in part by an improvement in
its U.K. retail business, higher wholesale prices locked in in prior years,
higher earnings in its network business in Germany, and efficiency
enhancements achieved under its PerformtoWin program. The main negative
factor was the disposal of power capacity and other assets in Germany.
Wider margins enabled E.ON's generation business in Russia to post
significantly higher earnings. A further increase in generating capacity
was responsible for the earnings growth at E.ON's renewables business.
E.ON's adjusted net income declined by 4 percent to EUR4.9 billion. Its
cash provided by operating activities rose by 24 percent to EUR10.6
billion. E.ON has made rapid progress reducing its debt. Its economic net
debt of EUR37.7 billion at year-end 2010 was EUR7 billion below the figure
at year-end 2009. As a result, E.ON's debt factor-the ratio of its economic
net debt to adjusted EBITDA-declined significantly as planned, from 3.4 to
2.8.
When it presented its new strategy last November, E.ON announced that its
2011 earnings would not match the 2010 level. A key factor is that
Germany's nuclear-fuel tax, whose purpose is to help consolidate the
country's budget, takes effect in 2011. It will adversely impact E.ON's
earnings by just under EUR1 billion in 2011. Another factor is that in 2011
the company's power business will feel the delayed impact of the lower
prices locked in when power was sold forward during the economic crisis.
E.ON's gas wholesale business remains under margin pressure because the
procurement prices under its long-term supply contracts are currently above
achievable sales prices. Overall, E.ON anticipates a significant earnings
decline in 2011, with adjusted EBITDA of EUR11.2 to EUR11.9 billion and
adjusted net income of EUR3.3 to EUR4 billion. E.ON plans to pay a dividend
of at least EUR1.30 per share for the 2011 financial year.
E.ON anticipates that its 2012 earnings will also be affected by these
extraordinary factors, though to a lesser degree than in 2011. By the end
of 2012, E.ON's new corporate strategy and planned additional efficiency
enhancements will enable it to address these adverse factors. As a result,
E.ON expects-despite the additional adverse impact of carbon-allowance
auctioning-that in 2013 the adjusted EBITDA of its current business
portfolio will return to roughly the 2010 level of at least EUR13 billion.
E.ON has already made good progress in the past four months implementing
its strategy. This includes expanding its core generation business. In
Malzenice, Slovakia, E.ON commissioned a 430 MW combined-cycle gas turbine
(CCGT) with a thermal efficiency of more than 58 percent. With the laying
of first foundation, offshore construction recently began on London Array,
the world's largest wind project. In Spain, E.ON and Abengoa Solar are
close to completing and beginning operational testing of two concentrated
solar power plants with a combined capacity of 100 MW. E.ON plans to
increase the capacity of pumped-storage hydroelectric stations in Germany
(Waldeck on Lake Eder) and Spain (San Miguel de Aguayo) by 300 MW and 1,000
MW, respectively. These investments are part of E.ON's program to reduce
its generation portfolio's carbon intensity. This will enable E.ON to
halve, by 2020, its European generation portfolio's specific carbon
emissions from a 1990 baseline, ten years earlier than previously planned.
These efforts will also further reduce the adverse financial impact of
carbon-allowance auctioning which starts in 2013.
The expansion of E.ON's business outside Europe is also on schedule.
Papalote Creek 2, another large E.ON wind farm, entered service at the end
of 2010 in the United States, a target region where E.ON now has nearly 2
GW of installed wind capacity. In Russia, E.ON's second target region
outside Europe, a new 400 MW CCGT entered service in November 2010 at an
E.ON power station outside Moscow. Three other CCGTs with an aggregate
capacity of 1,200 MW are almost ready to become operational in Russia.
These efficient, technologically advanced generating units will enable E.ON
to benefit from Russia's rising energy demand and electricity-market
liberalization. The process of analyzing and defining two additional E.ON
growth regions outside Europe is also on schedule.
E.ON intends to divest about EUR15 billion in assets by the end of 2013. In
2010, E.ON sold its Gazprom stake for a total of EUR3.4 billion and
divested its gas network in Italy, which has an enterprise value of roughly
EUR290 million. And, just a few days ago, E.ON sold Central Networks, its
U.K. power network operator, to Pennsylvania-based PPL Corporation for the
equivalent of EUR4.9 billion. In just a view months, these and a number of
other, smaller transactions have already enabled E.ON to achieve almost
EUR9 billion of its EUR15 billion divestment target.
E.ON will use a portion of these proceeds to reduce its debt. An example of
this was the company's offer-well received by the capital market-to
repurchase bonds ahead of schedule; under this offer E.ON repurchased bonds
with a total nominal value of more than EUR1.8 billion, thereby reducing
its gross debt accordingly.
E.ON's PerformtoWin program delivered more than EUR1.1 billion in permanent
savings by year-end 2010 and will achieve the full EUR1.5 target by
year-end 2011, thanks in part to the successful outsourcing of its IT
infrastructure under an agreement reached in late 2010 with Hewlett-Packard
and T-Systems. Going forward, E.ON will put even greater emphasis on the
profitability of its existing and new businesses and deliver an additional
EUR600 million in annual efficiency enhancements by the end of 2013.
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This press release may contain forward-looking statements based on current
assumptions and forecasts made by E.ON Group management and other
information currently available to E.ON. Various known and unknown risks,
uncertainties and other factors could lead to material differences between
the actual future results, financial situation, development or performance
of the company and the estimates given here. E.ON AG does not intend, and
does not assume any liability whatsoever, to update these forward-looking
statements or to conform them to future events or developments.
End of Corporate News
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Language: English
Company: E.ON AG
E.ON-Platz 1
40479 Düsseldorf
Deutschland
Phone: +49 (0)211 4579-0
Fax: +49 (0)211 45 79-5 01
E-mail: investorrelations@eon.com
Internet: www.eon.com
ISIN: DE000ENAG999
WKN: ENAG99
Listed: Regulierter Markt in Berlin, Düsseldorf, Frankfurt (Prime
Standard), Hamburg, Hannover, München, Stuttgart;
Terminbörse EUREX; Mailand
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114870 09.03.2011
DGAP-News: E.ON AG: E.ON making rapid progress implementing new strategy
| Source: EQS Group AG