E.ON SE’s share price up, posts better-than-expected first-half net income

August 13, 2014 1:40 pm

E.ON SE, Germany’s largest utility company by market value, posted a first half profit that surpassed median analysts’ forecasts, benefited by the Generation business of the company and some cost savings. Shares of the company rose as much as 5.6%, the most since September, and changed hands for 13.90 euros.

One of the analysts, who works at Kepler Cheuvreux – Ingo Becker commented for Bloomberg: “Generation is a bit better than expected. The saved refueling of the Grafenrheinfeld reactor contributed to that. Profit from non-European Union countries was slightly weaker than expected.”

According to the company’s statement, its underlying net profit declined by 20% from 1.91 billion euros over the same period a year ago, to 1.53 billion euros ($2.04 billion) in the first half of the current financial year. This result surpassed the initial analysts’ projection of 1.46 billion euros. E.ON SE also reported that its sales in the first six months of the year fell by 13% and reached 56.1 billion euros.

The earnings of E.ON SE before interest, taxes, depreciation and amortization over the period fell by 12% from 5.7 billion to 5 billion euros, topping the average analysts’ estimate of 4.9 billion euros.

According to the company, the main reason for the 20% profit decline over the first six months is the fact that the expansion of clean energy in the country caused a price fall for the German baseload power. Still, the E.ON’s shareholders got some good news, as the company revealed that its cost savings program had a positive effect on its earnings. The result was benefited by the higher production from the Skarv gas condensate and North Sea-located oilfield.

The home country of the company is seeking to generate up to 60% of its total electricity supply from clean sources by 2035. In comparison, the amount of electricity generated from clean sources in 2013 was 23%. That is why the government is making a reform, which was welcomed by the Chief Executive Officer of E.ON SE Mr. Johannes Teyssen. However, the latter also urged the government to follow the U.K.’s policy and introduce a capacity market to producers, who will be offered predictable revenue in return to ensuring security of supply.

E.ON SE was up 4.71% to trade at 13.79 euros per share by 13:05 GMT. The company’s shares have gained 10.24% in the past year, valuing it at 33.57 billion euros. According to the information published on the Financial Times, the 27 analysts offering 12-month price targets for E.ON SE have a median target of 14.00 euros, with a high estimate of 19.50 euros and a low estimate of 11.50 euros. The median estimate represents a 6.34% increase from the last price of 13.17 euros.

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