E.ON sticks by RE in tough times

E.ON’s renewables business was one of the few bright spots during the first quarter – an area the utility plans to expand further despite aiming for an overall leaner organisation.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) jumped 20% to €569m ($783m) in the first quarter from a year earlier. Excluding hydro, the rise at renewables was even greater, to €329m in the first quarter from €224m a year ago.

“E.ON is staying on course in difficult times. We’re reducing our debt and costs, without neglecting investments in our future,” chief financial officer Klaus Schäfer says.

The company plans to reduce controllable costs by another €300m this year, after it lowered its net debt in the first quarter of 2014 by more than €1bn.

“This gives us the flexibility to make targeted investments in growth businesses like wind and solar power,” Schäfer pointed out.

E.ON in January started installing foundations at its 288MW Amrumbank West wind farm in the German North Sea that is scheduled to enter service in the late summer of 2015.

Also in the second half of next year, the utility plans to commission the 219MW Humber Gateway offshore wind park in the UK.

“You can see that – amid all our cost-cutting efforts – not investing isn’t an option for us,” CEO Johannes Teyssen told investors in E.ON’s interim report, where he also calls for “appropriate compensation” for fossil generating capacity in Germany in the form of capacity markets.

The utility’s overall Ebitda fell 12% to €3.16bn in the first quarter from the year-earlier period, while its net profit plunged to €905m in Q1 from €2.35bn a year earlier.

Underlying net profit that is adjusted to exclude certain special effects fell 13% to €1.22bn in the period.