Despite record loss, E.ON reports 20% earnings increase for renewables

In presenting the company’s biggest loss since its establishment in 2000, the chief executive of German energy giant E.ON made it clear that the group’s future lay in renewables.

“The new energy world is about customer orientation, efficient and increasingly smart grids, renewables, distributed generation, and technical innovations,” said E.ON CEO Johannes Teyssen.

The Düsseldorf-based company, which is active in 14 countries, including 11 European markets, among them the United Kingdom, France and Italy, as well as Russia, Turkey and Brazil, announced in November that it was splitting its operations, spinning off its conventional energy business as a stand-alone company while shifting its focus entirely towards renewables, energy networks and customer solutions.

The group said a generally deteriorated business environment, altered market assessments and regulatory intervention had adversely affected its global and regional units over the past two years, resulting in a massive asset writedown of €5.5 billion on its Generation division (€4.3 billion of which stemmed from its businesses in the U.K., Sweden and Itay). That in turn led to a record net loss of €3.16 billion for the group, which reported a 7% drop in annual sales to €111.6 billion.

However, the company’s solar and wind business, part of its Renewables segment, performed particularly well with a 20% increase in profit (before interest, tax, depreciation and amortization) to €823 million.

In the future, E.ON will focus entirely on renewables, energy networks and customer solutions, which it describes as the “building blocks of the new energy world.” The group will transfer its conventional generation, global energy trading and exploration and production businesses to the new stand-alone company, which will also be listed.

Explaining the move, Teyssen said the decision was based on the assessment that over the past few years “two energy worlds” had emerged: a conventional and a new energy world.

“They’re not separate,” Teyssen stressed. “On the contrary, they depend on one another. But they place completely different demands on energy companies. The new energy world is about customer orientation, efficient and increasingly smart grids, renewables, distributed generation, and technical innovations. The conventional energy world, by contrast, requires expertise and cost efficiency in conventional power stations and global energy trading.”

E.ON is planning to announce initial details about the two companies in the second quarter.