E.ON enjoys sharp earnings increase

BERLIN - The Associated Press

Flags fly in front of E.ON base in Essen. The German company says its first-half earnings jumped.

German utility E.ON reaffirmed its guidance for this year after posting a sharp increase in first half earnings despite the country’s move away from nuclear power.

The company said yesterday that first half net income attributable to shareholders rose to 2.9 billion euros ($3.6 billion) during the period, up from 691 million euros last year. The company did not provide second quarter figures.

Overall net income was up to ?3.1 billion from ?948 million during the first half of 2011.

The increase in profit came largely due to a new agreement on long-term gas supply contracts with Russian gas producer Gazprom OAO, the company said.

That helped offset lower sales from its power-generation segment, which has suffered from the country’s decision to shut down nuclear power stations in Germany and due to an overall decline in output in the company’s generation portfolio in Europe.

Two of E.ON’s nuclear reactors were among eight older ones in Germany that were switched off last year after Japan’s Fukushima disaster, prompting the company to pursue cost savings and expansion abroad.

“’Our solid first-half results demonstrate that we’re meeting our existing challenges decisively,” chief executive Johannes Teyssen said. “We successfully renegotiated our gas-procurement contracts, and the transformation of our company through our E.ON efficiency-enhancement program is moving forward according to plan.”

The company said that the absence of the one-off effect of Germany’s accelerated phase-out of nuclear energy, recorded in the second quarter of 2011, had a positive impact on first-half earnings to the tune of 1.5 billion euros.

Overall sales were up 23 percent to 65.4 billion euros during the period, compared to 53 billion euros in the first half of 2011. Earnings before interest, taxes, depreciation and amortization were up 55 percent to ?6.71 billion from ?4.33 billion the previous year.