EON confirms 2018 targets after surge in customers

Frankfurt am Main (AFP) –


German energy giant EON reported Tuesday a jump in first-quarter profits thanks to a surge in new customers, keeping it on track to meet its 2018 targets ahead of a massive asset swap with rival RWE.

The Essen-based group, which has seen two years of huge losses as it scrambles to respond to a changing energy landscape, reported adjusted net profits of 727 million euros ($866 million) between January and March, up 38 percent on the same period last year.

Underlying or operating profits climbed 24 percent to 1.3 billion euros, EON said in a statement, hailing a "strong start" to the year.

"Our operating business is strong. We achieved significant growth by adding more than 50,000 customers in Germany," EON's chief financial officers Marc Spieker said.

Revenues however fell 11 percent to 9.33 billion euros, dragged down by a 30-percent slump in sales at the group's energy networks unit which EON blamed mainly on one-off effects and accounting changes.

Analysts surveyed by Factset had predicted revenues of 11.2 billion euros.

Like other European power firms, EON has for years been battered by low wholesale electricity prices and competition from subsidised renewable energy.

To respond to those challenges, EON announced in March that it planned to take over German rival RWE's renewables unit Innogy as part of a complex asset swap that could shake up the energy sector.

The second stage of the deal, expected to be completed by the end of 2019, would see EON transfer all of its renewables business to RWE -- including Innogy's activities.

The goal is for EON to focus on retail customers and on managing energy networks, essentially buying and selling electricity, while RWE will specialise in generating power from fossil fuels and renewables.

RWE for its part would gain an effective participation of 16.67 percent in EON -- turning the one-time competitor into EON's largest shareholder.

EON expects the Innogy takeover to lead to some 5,000 job cuts.

Looking ahead, EON said it continued to pencil in adjusted operating profit of 2.8-3.0 billion euros for the whole of 2018, and adjusted net profits of 1.3-1.5 billion.