E.ON stands by multi-billion investments despite economic crisis, E.ON Norway
Release Date: 2009-05-22
* €30 billion in investments, mainly in organic growth* Spending discipline, performance enhancement, and disposals strengthen company
* Proposed dividend: €1.50 per registered share
* Significant expansion of renewables
E.ON is successfully operating, is maintaining its strategic course, is further enhancing its competitiveness, is investing in organic growth and continuing to create jobs worldwide,” E.ON CEO Wulf H. Bernotat said at the company’s Annual Shareholders Meeting. With these clear statements he emphasized E.ON’s special position in the current economic crisis. “Only financially successful companies that invest billions, even during an economic downturn, can make a major contribution towards overcoming the crisis,” Bernotat added.
2008 was another financially successful year for E.ON. In a very difficult environment, E.ON increased sales by 26 percent to about €87 billion and adjusted EBIT by 7.3 percent to €9.9 billion. The increase is within the range of the earnings forecast E.ON issued before the economic crisis began. At the company’s annual shareholdings meeting today in Essen, Germany, the Board of Management and Supervisory Board will, in view of E.ON’s solid earnings performance, once again propose an increased dividend, this time to €1.50 per registered share. The proposed dividend represents a payout ratio of about 50 percent of adjusted net income. Even in difficult times, shareholders can count on E.ON for an appropriate return on their investment. This is one of the foundations for the great trust that capital markets place in E.ON.
Spending discipline in crisis
The economic crisis has affected E.ON to a less degree than companies in other industries. However, the impact is now being felt in the energy business, with energy demand declining - mainly from industrial customers. “In this situation, it’s our responsibility to be even more prudent and disciplined,” Bernotat emphasized. E.ON has extended the timeline of the remaining projects in its investment program in order to give it greater flexibility and room to maneuver. As things currently stand, E.ON intends to invest about €30 billion during 2009-2011, €6 billion less than originally planned for this period. However, the projects this affects will only be delayed. Average annual investments of €10 billion will enable E.ON to lay a foundation for further, stable returns and make it one of the few sources of stimulus in a sluggish economy.
At the same time, E.ON is enhancing its competitiveness through an efficiency program called PerformtoWin. In all areas of the company, and along the entire energy value chain, E.ON is improving efficiency and productivity, cutting costs in specific areas, optimizing its organizational structures and business processes, and eliminating redundant tasks and unnecessary bureaucracy. The program, which E.ON launched before the start of the economic crisis, has identified permanent improvement potential of up to €1.5 billion, which E.ON intends to realize by 2011.
E.ON has also decided to systematically optimize its portfolio. It will review the growth and earnings potential of each business. E.ON is working on the divestment of a total of at least €10 billion in assets. Together, these measures will enable E.ON to continue to achieve solid results and grow, even during an economic crisis.
E.ON expects its 2009 adjusted EBIT to match the high prior-year figure and its 2009 adjusted net income to decline by around 10 percent year on year. E.ON considers it possible that it could increase adjusted EBIT by 10 percent to about €11 billion based on its current portfolio. E.ON does not anticipate a significant improvement in these figures for 2010.
Focus on organic growth
In recent years, E.ON has grown mainly through acquisitions. It has built a broad, international platform which in the future it will expand mainly through organic growth. E.ON’s investments in power plants, networks, and pipelines enable it to seize the opportunities created by the necessary modernization of Europe’s energy structures. Of the €30 billion that E.ON intends to invest through 2011, about one third will go towards comprehensively updating its generation and network assets. The focus is on the construction of new, highly efficient coal-fired and gas-fired power plants in Germany and the United Kingdom which will replace older facilities. Two thirds of planned investments are for growth, about 80 percent of which represents organic growth. Here, E.ON’s main focus is on expanding its conventional generation capacity in the Netherlands, Belgium, Slovakia, Hungary, and Russia. On the gas side, the main growth will be in the upstream business. E.ON wants to produce more natural gas itself in order to further diversify its gas sourcing. It also intends to expand its liquefied natural gas business. Discussions with Gazprom regarding E.ON’s acquisition of a stake in Yuzhno Russkoye, a Russian natural gas field, are also nearly completed.
Call for energy-policy clarity
“Our strategy takes a long-term view, and for this we need a stable, reliable, long-term energy-policy and regulatory environment,” Bernotat said. He added that Germany and Europe continue to lack a holistic energy strategy that views cost-effectiveness, climate friendliness, and supply security as equally important energy-policy objectives and that combines them in a balanced plan for the future. The main feature of such a plan must be a broad energy mix that encompasses all energy sources and that integrates them into a sensible overall system that balances their respective advantages and disadvantages.
Significant expansion of renewables
Bernotat reiterated E.ON’s commitment to significantly enlarging its renewables capacity. The future clearly belongs to renewables, which will likely equal or surpass the contribution of fossil fuels by the middle of the century. That’s why E.ON - despite the economic crisis - is investing in renewables, mainly in wind, biomass, and biomethane and, going forward, in solar. E.ON still intends to invest the €6 billion earmarked for renewables for the period 2007-2010.
Bernotat pointed to the clear progress E.ON has made so far: “In less than two years, we’ve increased our renewables capacity to about 2,300 megawatts. We plan to have about 4,000 megawatts by 2010 and about 10,000 megawatts - the capacity of more than ten large-scale power stations - by 2015.” E.ON’s current focus is on operating and building onshore and offshore wind farms in the United States, the United Kingdom, Denmark, and Germany. E.ON will reach important milestones in 2009.
E.ON’s Alpha Ventus, Robin Rigg, and Rödsand offshore wind farms are under construction. The proposed increase in subsidies for offshore wind in the United Kingdom will help boost the economics of the London Array scheme, which at 1,000 megawatts would be the world’s largest wind farm. In addition to renewables, E.ON is committed to developing efficient, clean coal-fired power plants and also sees nuclear energy as a technology of the future with significant innovation potential. “Without nuclear energy - in particular, without German nuclear energy - Europe won’t reach its ambitious climate-protection targets.”
Social responsibility through entrepreneurial action
E.ON’s investments do not just benefit the company and its shareholders. They are also part of the way E.ON delivers on its commitment to social responsibility. Through its growth initiatives, E.ON hired about 13,000 new employees in 2008, 5,000 of them in Germany. E.ON’s ongoing investments in power plants and infrastructure will create 30,000 new jobs in Europe, more than half of them in Germany. Vocational trainees account for about 7 percent of E.ON’s workforce in Germany. Despite the economic crisis, E.ON will maintain this high percentage and continue to hire 800 trainees each year. It will also continue its proven training programs designed for young people who, for a variety of reasons, have found it difficult to enter the labor market.
| Type: | NORMAL |
| Company: | E.ON Norway |
| Country: | Norway |
| Url: | http://www.eon.com/en/investoren/news-detail-news.jsp?id=9165 |