EON Confirms Guidance Despite ‘Considerable’ U.K. Pressure
(Bloomberg) -- EON SE stuck to its guidance for 2019 after sales rose in the first quarter, even as the German warned its U.K. business remains under considerable pressure due to a price cap and stiff competition.
- News that the company boosted net customers by 100,000 in Germany in the first quarter will cheer investors betting on Chief Executive Officer Johannes Teyssen’s plans to transform EON into a grid-focused company.
- It will also help Teyssen’s sale pitch that EON -- generating an increasing share of its revenues from stable retail markets -- offers a safe haven for shareholders bruised by years of turmoil in Germany’s energy industry.
- That’s all as the company’s U.K. retail business continues to feel the heat from price caps and cutthroat competition. EON isn’t the only company having a tough time in what’s surely the toughest European market for utilities to make money in right now. British homeowners, disgruntled at higher bills, are readily switching suppliers. Responding to voter anger, U.K. Prime Minister Theresa May in January introduced a price cap that’s put further pressure on utilities.
- The company said plans to integrate Innogy remain on track to get the necessary approvals in the second half of 2019. A number of utility watchers expect the deal will clear with remedies. The European Commission has launched an in-depth probe into the proposed acquisition due to fears it would reduce competition for gas and electricity in Germany and beyond.
- Adjusted net income for 2019 seen between 1.4 billion euros ($1.6 billion) and 1.6 billion euros, similar to 2018 result of 1.5 billion euros. Adjusted Ebit seen between 2.9 billion euros and 3.1 billion euros. Dividend proposal of 46 cents per share reaffirmed.
- EON’s adjusted Ebit on its U.K. customer solutions operations dropped to 59 million euros from 148 million euros a year earlier. Operating cash flow showed a drain of 16 million euros, lower than the 103 million euros lost in the first quarter of last year.
- Link to statement
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