EON Climbs as Focus Turns to Full Year After Quarterly Miss

EON SE rose the most in two weeks as Germany’s biggest renewable energy company underlined its full-year earnings target after reporting first-quarter figures that missed estimates.

Adjusted net income is on track to increase almost 50 percent this year after one-time factors dented earnings in the first three months, Chief Financial Officer Marc Spieker said in a Bloomberg Television interview on Tuesday. Profit for the quarter through March dropped 20 percent on rebounding power and gas costs in Germany and the U.K., higher network fees and a nuclear reactor that is still offline after halting in February. 

EON is expected to benefit this year from price rises for German and U.K. customers, normal wind yields after a weak first quarter and the discontinuation of a nuclear fuel tax, according to RBC Europe Ltd. The results are the first without the costs related to the Uniper SE fossil-fuel and trading unit spun off in September as EON focuses on renewables, networks and retail consumers. 

“EON has tried to be clear that the weak Q1 is not reflective of the balance of the year where a number of positives are still to come,” John Musk, an analyst at RBC, said by email.

EON has gained 8.2 percent this year after falling in the previous two years. The shares rose as much as 2.4 percent to 7.27 euros after falling 1.2 percent earlier. It’s the day’s second-best performer in Germany’s benchmark DAX index, which increased 0.5%.

Earnings Miss

Adjusted net income totaled 525 million euros ($574 million) in the three months through March 31, the utility said Tuesday in a statement, missing the 548.5 million-euro average of six analyst estimates compiled by Bloomberg.

German power prices rose 33 percent in the quarter from a year earlier and U.K. gas jumped 42 percent, exposing the company to the volatile commodity markets it argued for months that the split from Uniper was designed to avoid. Slumping energy markets in the past few years forced EON to write down billions of euros of conventional generation assets.

Full-year adjusted net income will be between 1.2 billion euros and 1.45 billion euros, EON said in an earnings statement. The company has said it plans to boost this year’s dividend by 43 percent.

EON plans to cut its debt to about 20 billion euros. It fell 6.1 percent to 24.7 billion in the first quarter after raising capital in March.

The Brokdorf reactor is still offline after halting in February. The company’s latest guidance is that it will return to service later in May.

EON, formed in 2000 from a merger of utilities Veba AG and Viag AG, distributed 53 percent of Uniper’s stock to existing investors in September. Uniper first-quarter earnings fell, it said in a separate report on Tuesday.

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