News Column

E.ON posts 12% H1 profit fall on Russian business

August 14, 2014



Tensions between the West and Moscow over its support for separatists in Ukraine have already hurt German companies active in Russia, in sectors including cars and defence.



Germany's biggest utility E.ON posted a 12 per cent drop in first-half core profit, hit by a weakening economy in Russia and said it was concerned about the impact of the Ukraine crisis on its most important foreign market.







Tensions between the West and Moscow over its support for separatists in Ukraine have already hurt German companies active in Russia, in sectors including cars and defence.







The Ukraine crisis is the latest blow for E.ON which, like other German utilities, has seen its profits and share price tumble in an energy sector shake-up that has promoted solar and wind generation at the expense of utilities' gas-fired power stations.







Shares in E.ON, whose market value has slumped by nearly three quarters to about 27 billion ($36 billion) over the last six years, were up 4.3 per cent on Wednesday after group results beat analysts' forecasts.







Earnings before interest, tax, depreciation and amortisation (EBITDA) at E.ON's Russian business declined by a quarter to 268 million as a weakening Russian rouble hit profits when converted back to Europe's main currency.







The Russian rouble has fallen seven per cent against the euro so far this year.







E.ON has ties with Russia on several levels. Apart from selling electricity through its Russian unit E.ON Rossiya OAO , it also gets 30-40 percent of its gas from Gazprom and owns a quarter in Yuzhno Russkoye in Siberia, one of the world's largest gas fields.







"We're monitoring the Ukraine crisis with some concern. But we assume that we'll continue to be able to work together successfully with Russian companies," chief executive Johannes Teyssen said in a letter to shareholders.







Some analysts see recovery potential for E.ON shares in the second half of the year, provided the company continues to reduce debt and if there is progress in creating a so-called capacity market government payments to keep essential loss-making power plants running.












For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Khaleej Times (United Arab Emirates)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters