eat The head of the Essen-based energy group Eon hardly spoke of the good annual figures, increased profits and exceeded forecasts. In view of the “tragedy in Ukraine,” said CEO Leonhard Birnbaum at the balance sheet press conference on Wednesday. He strongly condemned the war against Ukraine, calling it “the worst humanitarian catastrophe in Europe since World War II”. At the locations in Slovakia, Poland, Hungary and Romania, a particularly large number of employees have friends, relatives and colleagues in and from the Ukraine: “Our concern is not purely abstract.”
But it is also about your own energy supply. Renewable energy sources, LNG and hydrogen are a good long-term perspective, but: “In the short term, it must be about the safe and affordable supply of industry and consumers,” emphasized Birnbaum.
Because of the “extremely high energy prices”, the Eon boss warned of further rising prices for customers and called for relief for citizens and industrial customers. In view of the current situation, price increases for your own customers cannot be ruled out.
The prices for electricity, gas and other energy sources have been rising massively for months. At the very beginning of the Ukraine war, panic prevailed on the world market. The gas price on the spot market has meanwhile risen to more than 300 euros per megawatt hour (MWh) and was thus more than ten times as high as a year ago. Gas currently costs around 110 euros per megawatt hour, more than four times as much as a year ago. The prices for electricity, oil and coal developed similarly.
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Eon has therefore “been calling for relief for customers for a long time by reducing taxes and levies on energy,” said Birnbaum. The eliminated EEG surcharge will be passed on in full to your own customers, that’s a start. But prices would remain high as a result of the war. How high, no one can seriously say in this situation. “We must now ensure that the price does not become so high that we can no longer bear it.”
Although the federal government introduced tax cuts on Wednesday due to the high energy prices, this does not result in a direct reduction in energy prices. Instead, advertising costs and the basic allowance are to be increased, and the commuter allowance will also rise to 38 cents. “Further measures must follow,” Finance Minister Christian Lindner also announced via Twitter.
With a view to the decision against a gas embargo, Birnbaum also praised the federal government. She acts “extremely prudently and responsibly”. Because without Russian gas, it simply wouldn’t work in the short term. Should there be a physical shortage of energy imports, this will also have consequences for Eon.
However, business is still going very well for the supplier. With the annual figures for 2021, the group has exceeded its own expectations. Operating profit rose by 25 percent to 4.7 billion euros compared to the previous year, and consolidated net income by more than 300 percent – from 1.2 billion to 5.3 billion euros.
Eon benefited above all from a well-running sales business, the profit of the customer solutions division rose by 45 percent to 1.5 billion euros. The restructuring of the sales business in Great Britain, where the energy group was able to significantly reduce costs, also contributed to this. The particularly high capacity utilization of the power plants with the high prices also had a positive effect on the result.
Manageable Russia risks
Unlike Uniper, VNG or Leag, Eon is not particularly affected by the high prices for coal, oil and gas. As a result of a “deliberately conservative procurement approach for all energy sales markets”, one is only exposed to a small extent to a negative effect, it said on Wednesday.
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For Eon, however, the situation is just as complex as for other energy companies. On the one hand they earn more than usual due to the high prices, on the other hand they fear a Russian export ban. Then the corporations would no longer be able to supply their customers with sufficient energy.
Eon has a stake of almost 15 percent in the Nord Stream 1 gas pipeline, which went into operation in 2011. After the Nord Stream 2 connection, which was laid in parallel in the Baltic Sea, was temporarily stopped during Russia’s attack on Ukraine, Prime Minister Mateusz Morawiecki also called for the first pipeline to be stopped.
However, Eon rejects this. After all, Nord Stream 1 is an approved and fully operational project. “We will not get out of our Nord Stream position,” Birnbaum said again on Wednesday.
Eon also has a pressing financial interest in continuing to operate the first Nord Stream pipeline. The profits from the participation flow into the pension assets. In addition, Eon Gas has bought from the Gazprom subsidiary Wingas, the contract runs until the end of the year. Against the background of the war, however, the purchase of new quantities has now been stopped, emphasized Birnbaum. Eon spun off the remaining Russian activities to Uniper in 2015.
Eon share: Prognosis only with reservations, share increases slightly
Eon is still making the forecast for the current financial year with reservations, as the further effects of the Ukraine war on business development and the key figures cannot be fully assessed at this point in time.
Under these conditions, Eon expects an Ebitda between 7.6 and 7.8 billion euros. After the closure of the last nuclear power plants, this is to be achieved through organic growth in the core business. Eon expects adjusted net income to be between 2.3 and 2.5 billion euros.
Eon confirmed the dividend proposal of 49 cents per share (previous year: 47 cents). After the annual figures were announced, the Eon share was almost one percent up at midday.
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