Renewables-focused E.On eyes profit of up to €1bn in 2016

 
Jessica Morris
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E.ON Announces Withdrawal From Conventional Energy
E.On will focus on renewable energy (Source: Getty)

E.On set its sights today on net income of up to €1bn (£775m) this year as Germany's largest utilities company pushed forward on plans to spin-off its power plant and trading businesses to focus on renewable energy and distribution grids.

E.On will list 53.4 per cent of its power plant and trading business, Uniper, providing it secures enough shareholder support at a meeting on 8 June.

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The company's shares, which have fallen nearly 40 per cent over the past 12 months, swelled 2.1 per cent in mid-afternoon trading.

"It’s right for us to divide our operations into two companies ... this sharper focus will enable E.On and Uniper to better meet their respective challenges," Johannes Teyssen, the firm's chief executive, said in a statement.

The German government's increased focus on renewable energy and its plans to abandon nuclear power as well as plunging wholesale electricity prices have strangled the profitability of traditional utilities firms.

The new E.On expects to post earnings before interest and tax of €2.7bn to €3.1bn this year, alongside underlying net income of €0.6m to €1bn. It outlined a "predictable dividend policy" of between 40 to 60 per cent of underlying net income a year.

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Uniper would aim to sell at least €2bn worth of assets by 2018 to cut costs and whittle down debt. It didn't put a figure on the cost savings or say which assets it would sell. The firm also plans to pay a dividend of €200m for this financial year, equivalent to about €0.55 per share.

"E.On stands at the beginning of a far-reaching transformation ... our objective is to make E.On into a leading company of the distributed, renewable, and digital energy world," Teyssen added.

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