German utility E.on books record loss as it writes down power plants
The figures
E.on reported a net loss of €7.25bn (£5.12bn) in the three months to September 30, the biggest in its 15-year history, when the company was created from the merger of Veba and Viag in 2000.
The Germany headquartered company's results were sunk by a €8.3bn writedown on the value of its power plants and oil and gas business.
Shares in the company were last up 0.8 per cent.
Why it's interesting
The German government's energy policies have put pressure on the profit margins of utility giants like E.ON. Its shift towards renewables and energy efficient products has come at the expense of coal and gas-fired plants.
The gloomy outlook has sliced around 36 per cent off the company's share price since the start of this year.
However, the company is trying to adapt to this, and late last year it announced a shift of focus towards renewable energy, energy efficiency and energy distribution.
Earlier this year E.on was fined fined £7m by the Gas and Electricity Markets Authority for failing to supply its business customers in the UK with smart meters.
It also hit headlines over the sale of its Norwegian oil and gas assets to a company owned by Russian billionaire Mikhail Fridman for $1.6bn. The move was part of its ongoing plan to restructure its oil and gas divisions.
What E.on said
"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. Our operating environment remains very difficult," Michael Sen, chief financial officer, said.
What the analysts said
"The massive impairments booked by the group during this quarter … clearly confirm a massive change in mid- to long-term assumptions," Bryan Garnier analyst Xavier Caroen wrote in a note to clients, keeping a "neutral" rating on E.ON shares.
"We remain cautious and continue to believe it is too early at this stage to play the 'recovery phase' on E.ON."