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EON Proprietary Unit Posts First-Half Loss After Rogue Trades

EON AG, Germany’s biggest utility, lost money trading on its own account in the six months through June after a former employee was suspected of falsifying positions.

The proprietary trading unit posted an adjusted loss before interest, tax, depreciation and amortization of 31 million euros ($38 million), the third consecutive first-half loss, according to data published today on the company’s website. EBITDA was minus 14 million euros in the first six months of last year, while 2010’s first-half loss before interest and tax was 65 million euros, according to earlier company filings.

EON, based in Dusseldorf, Germany, said in June it suspected a former employee “falsified” trading positions and may have concealed internal-rule violations and trading limits. The financial impact was expected to be below 20 million euros and no customers, counterparties or exchanges suffered damage, Georg Oppermann, a spokesman for EON’s trading unit, said at the time. EON first said it suffered losses because of the trader on June 4.

Proprietary trading is part of the utility’s optimization and trading business, which seeks to boost profits on sales of power, natural gas and other energy-related commodities. EON recovered from the first-half loss in 2011 to post a full-year profit of 44 million euros.

The utility is seeking to boost profit from cross-border trading of energy commodities in Europe, as the EU aims to form single power and gas markets in the region, according to a company presentation published in January.

Shares Gain

Since reaching an eight-month low of 14.05 euros on June 5, EON’s shares have risen 28 percent. They advanced 0.9 percent to 17.98 euros as of 1:53 p.m. Berlin time.

EON cut trading of natural gas, power and carbon allowances in the first half of this year, according to its results published today.

Gas trading declined 12 percent to 1,115 terawatt-hours, while power trading dropped 7.8 percent to 832 terawatt-hours and carbon fell 30 percent to 223 million metric tons, the utility said. Coal trading volume advanced 50 percent to 159 million tons.

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