Dusseldorf - EON SE disappointed analysts in its first earnings report free of the write downs from the fossil-fuel business it split from last year.
First quarter adjusted net income dropped 20 percent on rebounding power and gas costs in Germany and the UK, higher network fees and a nuclear reactor that is still offline after halting in early February. The results are the first without the costs related to the Uniper SE fossil-fuel and trading unit spun off in September.
German power prices rose 33 percent in the quarter from a year earlier and UK gas jumped 42 percent, exposing the company to the volatile commodity markets it argued for months that the split from Uniper was designed to avoid. Slumping energy markets in the past few years forced EON to write down billions of Euros of conventional generation assets.
Adjusted net income totalled 525 million Euros ($574 million) in the three months through March 31, the utility said Tuesday in a statement, missing the 548.5 million-euro average of six analyst estimates compiled by Bloomberg.
The company reiterated its forecast of a gain of as much as 60 percent in adjusted net income this year as it focuses on renewable, networks and retail consumers. EON is expected to benefit this year from price rises for German and UK customers, normal wind yields after a weak first quarter and the discontinuation of a nuclear fuel tax, according to RBC Capital Markets.
“EON has tried to be clear that the weak Q1 is not reflective of the balance of the year where a number of positives are still to come,” John Musk, an analyst at RBC, said by email.
EON has gained 6.7 percent this year after falling in the previous two years. It still trails the 11 percent increase in Germany’s benchmark DAX index. The shares rose as much as 1.4 percent to 7.20 Euros after falling 1.2 percent earlier.
Full-year adjusted net income will be between 1.2 billion Euros and 1.45 billion Euros, EON said in the statement. The company has said it plans to boost this year’s dividend by 43 percent. EON plans to cut its debt to about 20 billion Euros. It fell 6.1 percent to 24.7 billion in the first quarter after raising capital in March.
The Brokdorf reactor is still offline after halting in February. The company’s latest guidance is that it will return to service later in May. EON, formed in 2000 from a merger of utilities Veba AG and Viag AG, distributed 53 percent of Uniper’s stock to existing investors in September. Uniper first-quarter earnings fell, it said in a separate report on Tuesday.