EON Sees Full-Year Profit at Lower End of Forecast Range

EON SE, Germany’s biggest utility, said 2013 profit will be at the lower end of its forecast range following a 52 percent slump in nine-month earnings.

Underlying net income, the measure EON uses to calculate its dividend, will be 2.2 billion euros ($3 billion) to 2.4 billion euros, the Dusseldorf-based company said today in a statement. That compares with a previous projection of 2.2 billion euros to 2.6 billion euros.

European utilities are contending with slower economic growth and stagnant demand, as well as Germany’s planned exit from nuclear power by 2022 as it expands renewable generation. EON, growing abroad to counter a weaker home market, plans to reduce capital spending and is selling assets to cut costs.

Underlying net income fell to 1.91 billion euros in the nine months through September from 4.02 billion euros a year earlier, the statement showed. That missed the 1.94 billion-euro average estimate of five analysts surveyed by Bloomberg.

“These numbers reflect the fact that the ramifications of the transformation of Germany’s energy system, in particular the insufficient market price for conventional energy, are having a tangible adverse impact on our business,” Chief Executive Officer Johannes Teyssen said in a letter to shareholders.

Sales dropped 4.6 percent from a year earlier to 89.3 billion euros, EON said.

Dividend Estimate

“The numbers are broadly in line, also regarding the outlook,” Ingo Becker, an analyst at Kepler Cheuvreux, said by phone from Frankfurt. “It’s positive that the outlook wasn’t lowered.” Based on a dividend payout ratio of 50 percent to 60 percent, confirmed by EON today, Becker expects a dividend of 65 euro cents for 2013.

EON shares rose 2.1 percent to close at 13.78 euros at in Frankfurt today.

The company expects to earn at least 20.5 billion euros from asset sales and has already reached 18.9 billion euros of that target, it said today.

EON’s third-quarter underlying net loss totaled 4 million euros, compared with underlying net income of 719 million euros a year earlier. Sales retreated 13 percent to 24.7 billion euros. Both numbers were calculated by subtracting half-year earnings from the published nine-month results.

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