E.ON sees lower core profit in 2014 on power sector woes
DUESSELDORF, Germany (Reuters) - Germany's No.1 utility E.ON slashed its dividend and said it expected core profit to decline in 2014 for the third year in a row, adding it saw no end to a sector crisis that has eroded profits at its gas and coal plants.
The group said on Wednesday it expected earnings before interest, tax, depreciation and amortisation (EBITDA) of 8.0-8.6 billion euros ($11-$11.9 billion) this year, after a 14 percent decline to 9.315 billion in 2013.
It also proposed a dividend of 0.60 euros per share for 2013, nearly half the 1.10 euros paid a year earlier.
Analysts had, on average, expected 2014 EBITDA of 8.4 billion euros and a dividend of 0.66 euros per share for 2013.
Across Europe, utilities have been surprised a by a surge in renewable energy sources, most notably solar and wind, basically replacing power from many gas and coal-fired power plants and leading wholesale power prices to collapse.
"Taking a sober view of what lies ahead, there are few indications that our market environment will rapidly or tangibly improve," E.ON Chief Executive Johannes Teyssen wrote in a letter to shareholders.
The crisis has led French peer GDF Suez to book a 15-billion euro charge on its power assets, while German rival RWE earlier this month posted its first net loss since 1949.
E.ON, whose shares have tumbled 54 percent over the last four years, trades at 11.0 times estimated 12-month forward earnings, according to Thomson Reuters, below the 13.2 times for the European utility sector.
($1 = 0.7212 euros)
(Reporting by Christoph Steitz; Editing by Victoria Bryan)
