BIG SIX energy supplier E.ON yesterday blamed the European economic downturn for a 15 per cent decline in first-half earnings to €5.7bn (£4.9bn).
The German company said that its fossil power generation business in Europe was suffering from low wholesale prices as a result of the financial downturn.
The firm added that “interventionist energy policies and regulations” which prioritise and subsidise renewable energy had impacted profits.
Net income plunged 42 per cent to €1.9bn due to lower earnings and a higher tax rate, the utility said.
E.ON is selling some of its regional German businesses as part of a divestment strategy and recently mothballed a power plant in Slovenia.
“At least for 2013 and 2014, no recovery is in sight,” said chief executive Johannes Teyssen. “That’s why I announced at the start of the year that we’re responding particularly in our generation business – by cutting costs and enhancing efficiency.
“Unless the business environment of the energy industry in our core European markets changes tangibly, other plant closures will be unavoidable,” he added.
In an attempt to offset the European decline, E.ON has been expanding into other markets such as Turkey and investing in renewables. E.ON continues to expect its full-year earnings to be between €9.2bn and €9.8bn.
Shares closed 2.2 per cent higher.