GERMAN utility group E.ON will bear a €3bn (£2.6bn) charge in its 2011 accounts as large Eurozone countries such as Spain and Italy intervened to lower prices, it said yesterday.
E.ON, the world’s biggest utility company by sales, said the charge would damage its overall net profits, and lowered the top end of its profit range to €2.5bn from €2.6bn.
Net profit is now expected to be within the range of €2.1-2.5bn, while its adjusted earnings before interest, tax, depreciation and amortisation in 2011 is expected to be between €9.1-9.3bn. It had previously forecast adjusted Ebitda of up to €9.8bn.
The company said the biggest chunk of the charges, €2.1bn, were due to a pessimistic outlook for long-term power prices in Spain and Italy, as well as reduced load hours for gas and coal power plants in those countries.
“In addition, lower than expected volume and margin assumptions for some of E.ON’s Eastern European spread generation assets in Hungary and Slovakia trigger an impairment of €0.4bn. In central Europe, mainly in Benelux, impairments amount to €0.5bn,” it said.
Along with peer RWE, E.ON is currently suffering from the fallout from Germany’s decision to exit nuclear power, leading to shrinking profits, massive job cuts as well as an asset disposal programme.