Leading German utility E.ON (EONGY) swung deep into the red in the first half because of provisions and writedowns related to its September spinoff of fossil-fuels generation and trading company Uniper.
E.ON said it made a first-half net loss of €2.92 billion ($3.26 billion) in the six months ended June compared with a profit of €1.32 billion a year earlier. Group sales were crimped by lower energy prices and disposals, and declined 11% to €20.25 billion, while adjusted Ebitda fell 12% to €2.9 billion. That was above average expectations compiled by Dow Jones for Ebitda of about € 2.65 billion, and higher than the Dow Jones median forecast for Ebitda of €2.8 billion.
The E.ON is planning to spin off 53.4% of Uniper next month. Uniper employs 14,000 and owns power stations, energy trading and interests in gas fields and pipelines.
E.ON said it wrote down the value of Uniper in the first half to the tune of €2.9 billion and took €900 million in provisions for future Uniper liabilities.
German regulators are making E.ON hold onto its 40% share of about €23.3 billion in charges for decommissioning Germany's unwanted fleet of nuclear power plants as part of a phase-out of atomic energy in Germany by 2022. E.ON said its core business had performed in line with its expectations as it maintained its full-year earnings guidance.
"Our first-half results strengthen my conviction that our new strategy is the right response to the massive changes energy markets," said CEO Johannes Teyssen.
E.ON said it expects full-year adjusted Ebit to be between €2.7 and €3.1 billion, compared with €3.6 billion last year, and adjusted net profit to be between €6 and €1 billion, down from €1.1 billion.
First-half adjusted Ebit was down 6% at just over €2 billion.
E.ON shares closed down 0.3% at €9.35 on Tuesday. The stock has fallen 18% in the past year. E.ON has a market value of €18.8 billion.