Germany's EON hit by historic quarterly loss, plans job cuts

10th August 2011, Comments 0 comments

Germany's biggest energy group, EON, reported Wednesday its first ever quarterly loss as government plans to abandon nuclear energy forced a restructuring plan and the loss of up to 11,000 jobs.

EON said it had a net loss of 1.49 billion euros ($2.14 billion) in the three months to June. The loss attributable to shareholders, a slightly wider definition of earnings, came in at 1.58 billion euros, compared with a profit of 1.63 billion euros in the second quarter of 2010.

A company statement said it would carry out a broad restructuring of its activities that would result in 9,000-11,000 jobs.

EON also cut its full-year forecast and expected dividend as earnings were suffered from weaker sales of electricity and gas.

For the first half of the year, EON remained in profit, with a net income of 691 million euros, a figure that was nonetheless five times smaller than in the first six months of 2010.

EON pointed to a "massive decrease for all key earnings indicators," which it blamed on a sudden German government decision to mothball all nuclear reactors by 2022, starting in March.

The decision, following the March Japanese nuclear disaster, was accompanied by a tax on nuclear fuels that cut 1.9 billion euros from EON's operating profit, the group said.

It also suffered from long-term gas contracts at very unfavourable terms and poor results in its electricity brokerage activities.

The group slashed its full-year outlook and now expects a net profit excluding exceptional items of 2.1-2.6 billion euros from the previous estimate of 3.0-3.7 billion euros.

Shareholders were warned that prior guidance for a dividend of 1.3 euros per share would be cut to 1.0 euro.

EON plans to restructure its operations to save 1.5 billion euros per year, and warned that "possibly 9,000 to 11,000 jobs could be affected" from a group total of around 79,000.

Details on planned job cuts are to be released in the coming weeks.

© 2011 AFP

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