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    E.ON raises guidance on strong first half results

Summary

The cold weather meant more energy was transported, while the German utility has also made cost savings in the retail businesses.

by: William Powell

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E.ON raises guidance on strong first half results

German utility E.ON reported adjusted first-half earnings (Ebit) in its core businesses of €2.4bn ($2.8bn), an increase of 26% year on year, while adjusted net income of €1.8bn was 86% higher. Sales rose by €2.4bn year on year to €33bn. Adjusted Ebit for the whole group was up 45%, at $3.2bn. The company, as a nuclear power plant operator, benefited financially from an agreement with the government on power sales following the decision to close the plants down by next year.

E.ON CEO Leonhard Birnbaum said: “We now expect to achieve an adjusted Ebit target of €4.4bn-€4.6bn and adjusted net income of €2.2bn-€2.4bn for full-year 2021.”

CFO Marc Spieker said he "remained optimistic that E.ON will achieve its target debt factor of 4.8 to 5.2 this year and thus earlier than originally planned."

Savings in the UK sales business had a positive impact on second-quarter earnings while cooler weather relative to the prior year led to higher gas sales volume. Also, in the first six months of 2021 E.ON largely offset the Covid-19 pandemic’s economic effects in the first half of 2020. 

Adjusted Ebit at the customer solutions segment rose 75% year on year to €838mn, mainly owing to cooler weather in the first half of 2021, the merger with retailer Npower in the UK, and operating improvements in nearly all E.ON's markets. 

Energy networks recorded adjusted Ebit of €1.8bn, 8% more than in the prior-year period. Adjusted Ebit in the regional markets of Germany, Sweden, and east-central Europe and Turkey improved as they carried more energy for heating. 

Regarding the floods in the northwest of the country, Birnbaum said: “The catastrophic events have served as a painful reminder of the paramount importance of reliable and resilient energy infrastructure. The distribution networks that we operate are particularly crucial for people’s everyday lives.”

He called on German policy-makers to accelerate consents processes and to establish a reasonable rate of return on investments in energy networks: 'Strong and reliable infrastructure requires solid financing. It also requires an internationally competitive regulatory framework for investors to mobilise the necessary capital for this infrastructure.”