Eon reports record €16 billion loss for 2016


Eon was the first German power provider that dared to step into the renewable energy sector. The company has now presented its financial report for  fiscal 2016. This will be “the last to reflect the burdens of the past”, Eon said.

The company’s new strategy, which concentrates all of its activities related to fossil sources within the spin-off company Uniper, is included in the balance sheet for the first time. Eon is now focusing on three core businesses: energy networks, customer solutions, and renewable energy.

In its reporting, Eon said it has reached an agreement with German federal government on funding the phase-out of nuclear energy. This has also left tracks in the balance sheet, the company stressed. The spinoff  Uniper resulted in impairment charges totaling about €11 billion ($11.6 billion). The sale of the remainder of its shares in Uniper, however, could have a positive impact on future financial results.

The financing of the nuclear-energy phase-out will result in impairment charges of €2 billion ($2.1 billion). In addition, Eon must pay approximately €10 billion ($10.6) to state-owned nuclear energy funds. These payments are mostly covered with available liquid funds and securities.

Overall, the company stated, these one-off items resulted in a net loss of about €16 billion ($17.0 billion) for the year. “2016 was a transitional year, said the company’s CEO Johannes Teyssen. “The impact on our balance sheet marks a turning point and clears E.ON’s way into the new energy world.”

Eon was, however, able to post an adjusted EBIT of €3.1 billion ($3.2 billion) last year. This was down compared to 2015, although it exceeded the company’s forecasts. The renewables segment was able to post higher earnings, said Eon.

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The segment’s turnover decreased from €1.54 billion ($1.62 billion) in 2015 to €1.48 billion ($1.57 billion) last year, while adjusted EBIT increased year-on-year from €391 million ($415.5 million) to €420 million ($446.4 million). Investment in renewable energies for 2016 totaled €1.07 billion ($1.13 billion), slightly up from 2015.

The group’s net indebtedness reached €26.3 billion ($27.9 billion) at the end of 2016. This sum includes €5.0 billion ($5.3 billion) which was not calculated in fiscal 2015, when the group shares in Uniper were not comprised.

Eon is now implementing several measures to reduce its net debt by approximately €7 billion ($7.4 billion) in the mid-term. These measures are also intended to strengthen the company’s equity.

The group aims to reduce its investment budget by 20% to €8 billion ($8.5 billion) over the next three years. Furthermore, Eon said it will reduce its workforce by 1,300, of which about 1,000 will be in Germany. Currently, the company has approximately 43,000 employees.

Looking forward, Eon said it expects an adjusted Ebit of €2.8 billion to €3.1 billion for 2017 and an adjusted net income between €1.2 and €1.45 billion.

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