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 quarterly loss ever as government plans to abandon nuclear energy forced a restructuring plan that could affect 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 with the aim to save 1.5 billion euros per year and that "possibly 9,000 to 11,000 jobs could be affected."

EON has total staff of around 79,000 and details on planned job cuts are to be released in the coming weeks.

The trade union Verdi said EON did not exclude outright job cuts but noted that the group had previously pledged to guarantee jobs until end-2012.

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

The decision, made in the wake of the Japanese nuclear disaster, and a tax on nuclear fuels, cut 1.9 billion euros from EON's operating profit, it said.

On Tuesday, the second biggest German power group, RWE, also posted a quarterly loss for much the same reasons, and said it planned to divest several operating units.

EON suffered in addition from long-term gas contracts at very unfavourable terms and poor results in electricity brokerage activities.

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

The group slashed its full-year outlook and now expects a net profit excluding exceptional items of 2.1-2.6 billion euros, down 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.

In morning trade on the Frankfurt stock exchange, EON shares showed a loss of 0.61 percent to 15.43 euros, while the DAX index of German blue-chips was 1.53 percent higher overall.

© 2011 AFP

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