Eon declines in the second quarter

Revenue, EBITDA and profits declined in Q2 but on the positive side adjusted earnings grew.

Eon welcomes an increased adjusted earnings in Q2 but also had to acknowledge that both revenue and profit declined.

Revenue arrived at EUR 7.573 billion, down from EUR 8.982 billion in the same period the year prior. Operational earnings landed at EUR 1.892 billion, whereas in 2017 it landed at a profit of EUR 3.292 billion.

Instead, the German utility has opted to focus more on the adjusted figures for the half year, which show a somewhat different story.

However, the utility experienced growth in EBIT by 10 percent up to EUR 1.94 billion. It is worth noting that the adjusted EBIT result, however, declined by 10 percent in Q2 2018 relative to the same period of 2017, down to EUR 658 million.

The adjusted profits for the H1, however, are almost 20 percent better with a EUR 1.052 billion result relative to H1 2017.

The adjusted figures include critical activities, which include a deal entered between Eon and RWE in March. Eon acquired RWE's share of Innogy at 76.8 percent while RWE will acquire all of Eon and Innogy's green businesses. However, this is not the only thing RWE gained from the deal. The company will also acquire Innogy's gas storage and the company's ownership share in the Austrian supplier Kelag. Eon will also transfer its ownership shares in the subsidiary PreussenElektra and nuclear plants Gundremmingen and Emsland.

The deal also involves the renewable energy business which has been deemed a discontinuing activity but the adjusted figures also mean that fluctuations in valuations are excluded.

The renewables division delivered sales worth EUR 340 million in the quarter and EUR 741 million in H1. This is 2 and 4 percent better than the same period the year prior, respectively. According to the report, the now discontinued activities account for EUR 291 million of sales in H1 2018.

In the Energy Networks division revenue declined by 30 percent in Q2 to 3.09 billion while growing by 2 percent in the customer services division to EUR 4.73 billion.

"Our core business — Energy Networks, Customer Solutions, and Renewables — delivered good results, even though we continue to face fierce competition, primarily in our customer solutions business. We’re meeting these challenges with new products, new solutions, and even better, more efficient processes, particularly for our customers. All the key figures and developments for the entire Group are in line with our plan, and we therefore affirm our forecast for full-year 2018," says Marc Spieker, CFO at Eon, in a press release.

Eon's 2018 forecast include a EBIT of between EUR 2.8 billion and EUR 3 billion and an adjusted profit of between EUR 1.3 billion and EUR 1.5 billion.

In June, Eon sold its 46.65 percent share in Uniper to Finnish group Fortum for EUR 3.8 billion. This money has been primarily used to reduce Eon's debt, writes the company in the report.

Meanwhile, debt has been reduced by 18 percent to approximately EUR 15.9 billion.

"We’ll use this balance-sheet flexibility to implement the transaction we agreed on with RWE in March. When it closes, it will create a new E.ON and an even more powerful company, a company focusing on smart grids and innovative customer solutions and fully dedicated to serving its customers," Spieker said.

In connection with the deal with RWE, Eon has made a voluntary buy offer to major shareholders in Innogy, divesting of a further 9.4 percent more of its stake in the company. Eon is now sitting on 86.2 percent of shares in Innogy.

English Edit: Lena Rutkowski

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