EON Investors to Get First Look at Uniper at Strategy Event

  • Capital Market Day to unveil financial position of spinoff
  • Dividend and debt division to come under investor scrutiny

EON SE investors are set to get their first detailed glimpse of Uniper, the power company spun off from Germany’s largest utility.

EON is meeting investors at its “Capital Market Day” in London’s Canary Wharf financial district on Tuesday, when it will present the strategy and financial positions for itself and Uniper. High on investors’ checklists will be how the Essen-based utility’s debt will be divided between the entities as well as the two companies’ dividend policies.

EON’s decision to separate its fossil-fuel plants to focus on renewables is one of the most radical responses yet to Germany’s shift toward wind and solar generation, a policy that’s undermining power prices and hurting profitability at traditional utilities. EON’s share price has dropped 35 percent since it announced the spinoff in November 2014 and was the second-worst performer Germany’s DAX index last year. It’s up about 3 percent this year.

“We want to make clear at the meeting where EON will develop mid-term,” including business areas, growth opportunities and finance planning, Christian Drepper, a spokesman for EON, said by phone from Essen.

Unique Performer

Uniper, which stands for unique performance, will focus on conventional and hydropower generation, energy trading and the exploration and production business. EON may provide a concrete percentage of how much of a majority of the unit it will spin off.  

Tuesday’s presentations will be a “major catalyst” for investor interest in Uniper’s stock market listing planned later this year, said Peter Crampton, an analyst at Macquarie Group Ltd.

EON will give investors an historical financial breakdown for its remaining operations and those of Uniper for 2015 and an outlook for its future business. Underlying net income was forecast at 1.5 billion euros to 1.9 billion euros ($1.7 billion to $2.1 billion) for the whole group this year. 

Investors will also be looking at future dividend policies for EON and Uniper. While EON kept its 2015 annual payment at 0.5 euros a share, Chief Financial Officer Michael Sen said in February that the downturn in the energy industry is a “reality check” on EON’s future investment and dividend strategy.

EON and utilities including RWE are putting billions of euros aside to pay for the country’s exit from atomic power by 2022. Germany’s nuclear commission is said to favor an atomic cleanup fund that would cap the companies’ liabilities, though a decision by the government-appointed panel won’t be made until at least April 27, after EON’s investor meeting.

Standard & Poor’s and Moody’s Investors Service rank EON’s debt at the third-lowest investment grade with negative outlooks. How much net debt Uniper takes on will be key for the company’s valuation, said Macquarie’s Crampton, who says both companies can maintain investment-grade ratings.

EON fell 1 percent to 9.21 euros by 1:20 p.m. in Frankfurt. That compares with a 0.2 percent decline in the Stoxx 600 Utilities Index.

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