Leading German utility E.ON (EONGY) on Wednesday reported a 30% jump in first-quarter net profit after it adjusted a natural-gas supply contract with Russia's Gazprom (OGZPY) . But it warned that its traditional business faces challenges.
The company has bundled its power station and energy trading operations into a new entity, Uniper, and it plans to seek shareholder permission in June to list the business in the second half. The slimmed-down E.ON is staking its future on renewable energy after the German government, in the wake of the Fukushima nuclear meltdown in March 2011, decided to phase out nuclear energy by 2022.
In Wednesday's earning update, it said quarterly profit would have fallen from a year earlier without the Gazprom-related gain. That pushed net profit up to €1.3 billion ($1.48 billion) - slightly above analysts' forecasts - from €1 billion. Ebitda rose to €3.1 billion from €2.8 billion.
"Our first-quarter results indicate that parts of our traditional operating business remain under pressure. That's why it's all the more important that since the start of the year E.ON's transformation has moved forward according to plan," said CFO Michael Sen in a statement, referring to the Uniper separation.
E.ON expects its full-year 2016 Ebtida to be between €6.4 and €6.9 billion, up from a range of €6 billion to €6.5 billion it had predicted before the Gazprom deal. It expects its underlying net profit to be between €1.5 and €1.9 billion.
E.ON's 2015 Ebitda was €7.6 billion, while underlying net profit was €1.6 billion.