EON upbeat about 2017 despite tough first quarter

Berlin: Massive German energy firm EON on Tuesday reported a tough first quarter but confirmed forecasts for the full year, hoping to rebuild in 2017 after grave losses last year.

The Essen-based group reported adjusted net profits of €525 million ($573 million; Dh2.11 billion) between January and March, 20 per cent lower than the first quarter of 2016.

Revenues fell 7 per cent to €10.5 billion, which the firm blamed on unfavourable exchange rates, falling revenue in Britain, and a lack of breezes at its wind farms over the winter.

“Our first-quarter operating performance was in line with expectations despite a difficult business environment,” chief financial officer Marc Spieker said in a statement.

EON is sticking to its objective announced in March, saying it will increase net profit excluding extraordinary items this year to between €1.2 and €1.45 billion, up from €904 million in 2016.

Investors in Frankfurt appeared satisfied with the group’s explanations, with its shares gaining 1.4 per cent to trade at €7.19 at 0800 GMT Tuesday, against a Dax index of leading German shares up only 0.21 per cent.

Last year, EON booked its worst-ever loss of more than €8 billion, as it accounted for depreciations in the value of its assets linked to its splitting off renewable generation from coal and gas.

Like other European generators, EON has been struggling with lower electricity prices and competition from subsidised renewables in recent years.

Germany’s decision to shut down all its nuclear power plants by 2022 after the Fukushima disaster in Japan has made business even more difficult.

EON’s coal and gas plants are now grouped together in a subsidiary, Uniper, while it has kept clean energy sources, power grids and customer services under its own umbrella.

The group also announced that it had reduced its debt from €26.3 billion at the end of 2016 to €24.7 billion by the end of March, thanks largely to a capital increase to help it pay off costs relating to the nuclear phaseout.