E.ON reports big charge for devalued European assets
The biggest German power company, E.ON, said on Wednesday it would book charges worth 2.6 billion euros (3.6 billion dollars) for devalued assets in France, Italy and Spain.
The assets were bought by E.ON for 11.8 billion euros after the Spanish group Endesa was acquired by the Spanish/Italian consortium Acciona/Enel.
E.ON had sought to buy Endesa as well but had to settle for parts left over from the Italian/Spanish deal.
The German group said in a statement that since its last valuations in 2009, "it believes the market environment in Italy, Spain, and France has deteriorated due to the negative impact of the financial and economic crisis."
E.ON added that the charges will "reduce the group's net income" but did not say by how much.
But the new accounting would not change E.ON's operating target, it added, which helped shares in the group hold up in early trading on the Frankfurt stock exchange.
The power company still expects core earnings before interest and taxes to grow by up to three percent this year, and a net profit at least equal to that reported in 2009.
In the first nine months of 2010 meanwhile, E.ON said it had made an adjusted operating profit of eight billion euros, a gain of nine percent from the same period a year earlier.
Shares in the power company gained 0.42 percent to 22.48 euros in morning trading, while the DAX index of German blue chips stocks was 0.22 percent lower overall.
"The accounting correction is surprising. But the most important thing is that the adjusted profit target was maintained, because it is the basis for dividend payments," Merck Finck analyst Theo Kitz told AFP.
"The dividend is the main attraction for E.ON shares, and for power company shares in general," he added.
© 2010 AFP