10/3/2005

Profit of German E.ON increased last year, company plans acquisitions

FRANKFURT March 10 – Operating profit of German energy company E.ON went up by 18 percent last year, fueled by high electricity prices, cost cutting measures and acquisitions. Tonight, the company announced it was planning to make new acquisitions.

Adjusted pre-tax profit went up to € 7.36bn from € 6.23bn in 2003. Analysts approached by Reuters expected a € 7.25bn result on average.

However, E.ON’s net profit fell to 4.34bn from € 4.65bn. Analysts expected the net profit to drop to € 4.56bn, because the 2003 results included about € 1.3bn from asset sales.

This morning, the group informed that its last year’s sales went up by 6 percent to € 49.1bn. This result was slightly better than analysts expected.

E.ON proposed to increase the last year’s dividend by 17.5 percent to € 2.35 per share. The group wants to keep increasing annual dividends by at least 10 percent until 2006.

At a later press conference, E.ON announced that by 2007, it intends to invest € 5.2bn in infrastructure. All in all, it wants to spend € 18.7bn for its expansion in the energy industry field.

The company intends for example to invest in the USA, however, it hasn’t disclosed its detailed plans there yet. In Russia, the company plans to initiate joint projects with gas industry giant Gazprom.

Last year, E.ON was able to increase electricity prices, which safely covered increased costs of coal and natural gas. Profitability was also boosted by incorporating new acquisitions, such as Swedish Graninge or British Midland Electricity.

E.ON announced today that it plans further acquisitions in Europe, but it hasn’t disclosed any details. Analysts speculate it could be interested in no. 2 on the Italian electricity market Edison. French Electricité de France is now looking for partners for entry to Edison’s parent company Italenergia.

In the last four years, E.ON has bought over € 42bn worth of assets in the energy industry, including British Powergen or German Ruhrgas, and sold assets worth over € 42bn. In the Czech Republic, E.ON operates chiefly in Southern Moravia and Southern Bohemia.

Source: Czech News Agency (ČTK)