Impairments and contingency losses for fossil power stations and gas storage have made E.ON post a net loss of €3.03 billion – a stark contrast with the profit of €1.15 billion a year earlier. The German utility is preparing for the listing of its Uniper unit next month.
The utility disclosed d it took an impairment charge of €3.8 billion for Uniper, including €2.9 billion in write-downs on power stations and gas storage facilities, as well as €900 million in provisions. Revenue fell 11% to €20.25 billion.
Analysts have estimated the true market value of Uniper at around €3 billion, suggesting there will be more writedowns in the future which would leave very little remaining equity.
E.ON’s adjusted net income, without Uniper, plunged 28% to €604 million in the first half of 2016; though the company reiterated goals for a full-year net income for the new E.ON between €600m and €1bn.
Radical restructuring
In a strategic reorientation towards renewables, E.ON decided to spin off and list 53% of shares in its power generation, gas and oil spinoff company, Uniper, at the Frankfurt Stock Exchanges. The new E.ON will focus on highly profitable, stable, and largely regulated businesses: energy networks, customer solutions, and renewables. Uniper, meanwhile, will handle about 40 GW of installed power generation capacity, including the phased-out nuclear plants in Germany.
“Change is the only way forward,” E.ON chief executive Johannes Teyssen said, admitting earlier that his company’s may have ignored the market changes in relation with Germany’s Energiewende policy for too long. “We should have been more conservative and not try to ride the cycle to the end,” he said.
Cost cutting
Keen to curb costs, E.ON’s conventional power generation spin-off Uniper plans to divest parts of its business and cut jobs, CEO Klaus Schäfer told German media:
“What’s clear: We’ll see job cuts of a considerable magnitude. Otherwise, we are not competitive in the difficult market environment."