May 8 (Bloomberg) -- EON SE, Germany’s biggest utility, reported a 16 percent drop in profit in the first quarter because of divestments, lower output and narrower margins in power generation from fossil fuels.
Underlying net income, the profit measure EON uses to calculate its dividend, fell to 1.39 billion euros ($1.82 billion) from 1.66 billion euros a year earlier, the Dusseldorf-based company said today in a statement. That beat the 1.3 billion-euro average estimate of seven analysts compiled by Bloomberg. Sales gained 0.4 percent to 35.9 billion euros.
“Conventional power generation gives cause for concern,” Thomas Deser, a portfolio manager at Union Investment GmbH, one of EON’s top 10 shareholders, said by phone from Frankfurt. “It’s important that EON balances that by increasing renewables.”
European utilities are contending with weaker demand and a slower economic outlook ahead of Germany’s planned exit from nuclear energy by 2022. EON, which scrapped previous profit forecasts for 2013, plans to reduce capital spending and is selling assets to cut costs. The utility, which is focusing on expansion abroad, is also studying whether to close unprofitable power plants at home.
Adjusted earnings before interest, tax, depreciation and amortization for EON’s generation division fell 23 percent to 866 million euros in the quarter. Earnings from gas generation slumped 94 percent.
“With our fossil generation we earn next to nothing,” Chief Financial Officer Marcus Schenck said in an interview at Dusseldorf.
EON confirmed its outlook of an underlying net income of 2.2 billion euros to 2.6 billion euros for this year.
EON rose 0.4 percent to 13.24 euros in Frankfurt trading.
Separately, Norway’s biggest utility Statkraft AS said it sold all its EON holdings for 8.5 billion kroner ($1.5 billion).
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