European slump hits E.ON despite UK price rise

After hitting British households that needed the heating over the long, cold winter with price hikes of up to 9.4%, German energy giant E.ON today showed how much it cashed in, with UK revenues rising 9% to £4.4 billion for just the first half of the year.

The German power group forced its 5.3 million UK customers to pay 8.7% more for dual fuel and 9.4% more for gas in January, helping its underlying earnings in this country to shoot up to £274 million, from £242 million in the first half of 2012.

“Sales at the UK regional unit rose primarily because of higher retail sales resulting from increased demand due to low temperatures, particularly in March,” E.ON said.

But the group’s underlying net income fell 42% to €1.9 billion in the first half as it said falling wholesale power prices and booming demand for renewables across Europe was gnawing at profit.

“A sober view of the situation indicates that, at least for 2013 and 2014, no recovery is in sight,” chief executive Johannes Teyssen said.

Low wholesale prices, and the fact that solar and wind energy take priority in being fed into the power grid, mean gas plant operators in Germany are losing €16.5 per megawatt hour.

E.ON has already retired about 6.5 gigawatt in power plant capacity and Teyssen added: “Increasingly we also must consider closing and mothballing some assets. Unless the business environment of the energy industry in our core European markets changes tangibly, other plant closures will be unavoidable.”

Rival Centrica, owner of British Gas, made an adjusted operating profit of £1.58 billion in the first half, up 9% thanks to Britain’s long and cold winter, whilst EDF posted a £903 million UK profit in the first half of the year.