German utility E.ON AG (EONGY.PK) on Wednesday reported a swing to profit in its fiscal 2012, mainly on the absence of last year's one-off charges relating to Germany's accelerated phaseout of nuclear energy. Underlying earnings surged on significant improvements in wholesale gas business.
Looking ahead for fiscal 2013, the company continues to expect lower underlying earnings and EBITDA, a key earnings metric, reflecting the loss of earnings streams through asset sales under its ongoing divestment program.
For the year 2013, E.ON continues to expect underlying net income, which excluded items, to be between 2.2 billion euros and 2.6 billion euros and underlying earnings per share between 1.15 euros and 1.35 euros. Adjusted earnings before interest, tax, depreciation and amortization or EBITDA would be between 9.2 billion euros and 9.8 billion euros.
In the year 2012, underlying net income, as announced earlier, was 4.19 billion euros, 67 percent higher than last year's 2.5 billion euros. Underlying earnings per share was 2.20 euros, higher than 1.31 euros a year ago.
Adjusted for extraordinary effects, EBITDA grew 16% from last year to 10.79 billion euros.
Annual net income attributable to shareholders, including items, was 2.217 billion euros, compared to last year's net loss of 2.219 billion euros. Earnings per share were 1.16 euros, compared to loss of 1.16 euros in the prior year.
The company attributed the growth in earnings mainly to a significant improvement in the gas wholesale business following the renegotiation of gas-procurement contracts with producers and the retroactive recovery of losses recorded in earlier years. These were partly offset by lower prices and sale volume in the power business.
Sales for the year increased 17 percent to 132.09 billion euros. Lower sales in generation, and exploration and production segments were more than offset by improved sales in all other divisions, mainly optimization and trading, as well as in its domestic market.
Electricity sales, including trading sales volume, edged up 1 percent to 740.4 billion KWh, and gas sales grew 5 percent to 1,162.1 billion KWh in the year.
E.ON Chief Executive Officer Johannes Teyssen said, "... our technologically advanced, climate-friendly gas-fired power plants are currently barely profitable, although they're urgently needed for the stability of the power system. Policymakers need to act swiftly on this issue. Otherwise we're going to have to shut down power plants."
Further, the company said its Board, as announced earlier, will propose to the Annual Shareholders Meeting a dividend of 1.10 euros per share, 10 percent higher than last year's 1 euro per share.
Regarding its plans for cost reductions and efficiency improvements in all of businesses, the company noted that its on track towards achieving goal of reducing controllable costs to 8.3 billion euros by 2015 at the latest. The company also expects to surpass original target of 15 billion euros from the sale of noncore assets by a wide margin and are now aiming for up to 20 billion euros.
Talking about E.ON's reorientation, Teyssen said, "We're tapping growth markets like Turkey, Russia, and Brazil. In addition, we're making above-average investments in renewables and rapidly expanding our business in distributed generation."
On Frankfurt's Xetra, E.ON shares are currently trading at 13.03 euros, down 0.01 euros or 0.04 percent.
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