E.On's shares dropped more than three per cent after the energy provider announced it booked a net loss for 2016 double the loss of the previous year.
In the year to the end of December, the German energy firm reported a net loss of €16bn, compared with a loss €6.4bn the previous year. This was its biggest loss ever, and one of the largest in German corporate history.
The company said it has a debt pile of €26bn, and it aims to cut annual costs by €400m by next year. That means it's slashing 1,300 jobs, or three per cent of its total workforce. It will also reduce its investment budget by a fifth.
E.On proposed a dividend of €0.21 per share for 2016, down from €0.50 in 2015. Reuters said this was in line with the average forecast. It also planned a fixed payout of €0.30 per share for 2017.
Shares in the Frankfurt-listed company fell 3.25 per cent in afternoon trading.
Why it's interesting
E.On said its huge loss was because of major impairments on conventional power plants that are held by Uniper, a company the firm spun off last year. Shareholders weren't necessarily jumping for joy over the break-up of the company, and chief executive Johannes Teyssen has had to defend the decision.
"This complete break with the past left deep marks on our balance sheet and equity. But from a balance-sheet perspective, it really is a clean break," Teyssen said to reporters at the group's annual press conference.
The German government plans to increase its focus on renewable energy and abandon nuclear power. Traditional utilities firms have struggled to stay profitable under the changes, as well as plunging wholesale electricity prices.
E.On is expected to make a decision soon on whether to sell new shares to raise money for Germany's nuclear waste provisions.
What E.On said
The Uniper spinoff and the funding of nuclear-waste storage left deep marks on our balance sheet. In 2016 these burdens of the past affected our income statement for the last time, leading to a net loss of €16bn.
Adjusted for disposals, the E.On group’s earnings strength actually improved relative to the prior year.
We have a good foundation on which to continue our company’s transformation. I’m firmly convinced that much of our success will depend on our adaptability. For us, 2017 will be a year of transformation.