E.On admits to second €2.6bn charge on Mediterranean assets

GERMAN utilities company E.On admitted yesterday net profit would be lower as a result of taking €2.6bn (£2.2bn)in impairment charges on its assets in the Mediterranean.

As much as €1.1bn will be written off in goodwill, with a further €1.5bn of impairments to be made on other assets in Italy, Spain and France.

E.On said: “The development of electricity and commodity prices is in some cases leading to significantly lower margins and capacity utilisation,” in the three countries.

However, it said earnings before interest and taxes (EBIT) would not be affected as it reported earnings in the first nine months rose nine per cent to €8bn.

E.On, which is due to report full nine-month results on 11 November, also confirmed its 2010 outlook for adjusted EBIT growth of between zero and three per cent.

The news marks the second occasion that E.On has had to book impairment charges on its assets in Italy, Spain and France since acquiring them. In early 2009, the company booked around €1.8bn in charges on assets in the three markets. At the time, however, the bulk of the charges were related to an increase in corporate taxes in Italy.