Uniper Profits Down, E.ON Up
German fossil fuel energy supplier Uniper saw first quarter 2018 profits decline, partly because it no longer has Russian upstream gas interests, while its former parent E.ON saw a rise.
Uniper’s net 1Q income shrank by 83% year on year to €130mn ($155mn), it reported May 8, down from €751mn the year before. Adjusted earnings before tax (Ebit) were also 32% lower at €350mn, which it said was largely anticipated. Main factors adversely affecting operating earnings included the absence of earnings streams from the divested stake in Yuzhno-Russkoye gas field in Russia, sold to OMV, and from the decommissioned power plant units Maasvlakte 1 and 2 in the Netherlands (both coal) and Oskarshamn 1 in Sweden (nuclear)
Its global commodities (trading) segment’s earnings also declined, by 42% to €134mn. Uniper said the late arrival of winter temperatures prevented it from fully monetising the options of its gas portfolio, although it expects to report some gains from the latter in 2Q2018.
It said that low temperatures in the second half of 1Q2018 triggered “extreme price fluctuations at individual gas trading points which challenged gas utilities to deliver on the agreed supply contracts, without resorting to significant gas market purchases,” but that Uniper had risen to the challenge, thanks to its flexible gas storage portfolio.
Damage found at the Datteln 4 hard coal power plant project’s boiler, under construction, prompted Uniper to say that its commissioning will be delayed until summer 2020 – a factor that led it to an impairment charge on the German power project of around €270mn.
It noted that the new German government intends to propose, before end-2018, an end-date for generation of power from coal, This will be tabled by a commission yet to be formed.
Uniper also said that the “attitude to the Nord Stream 2 natural gas pipeline project remains particularly contentious,” but it remains committed to financing it, and that it secured key approvals in the last quarter. Denmark, Russia and Sweden have yet to issue theirs.
Uniper also said its net debt had crept up to €2.6bn at end-March 2018, from €2.45bn a year earlier. The company is now 47.12%-owned by Finnish utility Fortum, after former parent E.ON shed its 46.65% interest in Uniper last year. Late last month Russian anti-trust authorities cleared Fortum’s acquisition of up to 50% of Uniper, thus blocking the Finnish firm from securing a majority interest in future.
E.On net income, also reported May 8, increased to €1.03bn in 1Q2018, from €735mn in 1Q2017.
Two months ago E.ON and rival RWE agreed a deal whereby E.ON will acquire RWE’s 76.8% stake in Innogy as part of an extensive asset swap, including RWE getting a 16.67% stake in E.ON.
On April 27 E.ON published its voluntary public takeover offer for Innogy stock. E.ON said the transaction will take place in several steps and is subject to the usual antitrust approvals, which are not expected before mid-2019.
Innogy’s management and supervisory boards said April 27 they would ”carefully review” the offer, but asked its shareholders to “refrain from taking any action and especially from selling their shares until it has delivered this so-called reasoned statement.”