German energy giant E.ON posts record net loss
German energy giant E.ON announced Wednesday a record loss for the third quarter due to heavy writedowns in the value of its power plants.
Amid rock-bottom prices for wholesale electricity, the company based in the western city of Duesseldorf said it wrote down power generation assets by 8.3 billion euros ($8.9 billion) for the period July to September.
This led to a net loss of nearly 7.0 billion euros, the group said in statement.
"The impairment charges were triggered by the significant decline in commodity and energy prices, which is mainly a result of structural changes on global energy markets and on the regulatory framework," chief financial officer Michael Sen said.
"Our operating environment remains very difficult."
The third-quarter losses, despite a nearly 5.0-percent rise in turnover to 27 billion euros, left little doubt that E.ON will post heavy losses for the full year, probably even more than the 3.2 billion euros incurred last year.
The group said nevertheless that its operating profit (EBITDA) -- in which writedowns are stripped out -- would reach 7.0-7.6 billion euros.
Germany's energy companies are in a tough situation at the moment, with wholesale electricity prices very low.
Furthermore, electricity generated from traditional gas, coal and nuclear plants is having to compete with the heavily-subsidised renewables sector.
Some observers are even beginning to question the future survival of Germany's main power suppliers -- E.ON, RWE, EnBW and Vattenfall -- which employ a combined workforce of 154,000.
E.ON has announced it would split its renewable energy activities from the rest of its operations.
© 2015 AFP