In a keenly competitive environment, E.ON's results for the first nine months of 2008 surpassed the high level of the prior-year period. E.ON increased sales by 22 percent, from €49.4 billion to €60.5 billion, in part due to newly acquired operations in Spain, Italy, and Russia. The company’s global renewables business and expanded production at its natural gas business were also positive factors.
E.ON's adjusted EBIT rose by about 8 percent year on year to €7.7 billion. Central Europe's adjusted EBIT increased by 5 percent to €3.7 billion primarily due to higher gross margins. This positive effect more than offset the adverse effects of the shutdowns at Krummel and Brunsbüttel nuclear power stations, lower electricity network fees in Germany, and the voluntary agreement with Germany's Federal Cartel Office to reduce and delay the passthrough of higher natural gas procurement costs to customers.
Pan-European Gas's adjusted EBIT increased slightly to about €2 billion, benefiting mainly from higher production and earnings in the upstream business. In the midstream business, higher earnings from an increase in deliveries to industrial customers, and customers outside Germany were mostly offset by rising gas procurement costs. In addition, continued competitive pressure on sales prices also had a impact.
U.K.'s adjusted EBIT declined by 25 percent, or just under €250 million, to about €750 million. The key negative factors were currency effects and significantly lower retail margins. Nordic's adjusted EBIT climbed by 10 percent to more than €650 million, while U.S. Midwest's decreased by 7 percent to roughly €270 million due to the Euro's strength against the Dollar.
The new Energy Trading market unit recorded an adjusted EBIT of more than €400 million. E.ON continues to disclose its other new market units -- Italy, Spain, Russia, and Climate & Renewables -- in its Corporate Center/New Markets reporting segment.
E.ON's adjusted net income increased by 6 percent to €4.5 billion, mainly reflecting the company's positive adjusted EBIT performance. E.ON’s economic investments of nearly €19 billion -- almost four times the year-earlier figure -- went towards acquisitions, wind farm projects, power plants, power and gas networks, and the expansion of natural gas production.
E.ON continues to stand by its earnings targets for 2008 and expects the group's full-year adjusted EBIT and adjusted net income to surpass the respective prior-year figures by 5 to 10 percent.
E.ON CEO Wulf H. Bernotat said, "The first nine months of 2008 clearly demonstrate that we’ve set the right course for making E.ON even more international, even more focused, and even more profitable. This will enable us to continue our growth strategy, even in the current financial crisis. To lay the foundation for future earnings increases, we launched improvement programs long before, and independently of, the current financial crisis. The programs will improve our organizational structures and business processes with the aim of making E.ON even stronger, more agile, and more competitive."
Strong Financial Results
The Supervisory Board of DONG Energy A/S has today approved the interim financial report for the first nine months of 2008, which developed as follows compared with the first nine months of 2007:
- Revenue was DKK 41,612 million versus DKK 27,401 million
- EBITDA was DKK 10,993 million compared with DKK 6,443 million, with the following distribution between DONG Energy's four business segments:
- Exploration & Production DKK 4,106 million, up from DKK 1,469 million due to higher production and higher oil and gas prices
- Generation DKK 2,454 million, down from DKK 2,788 million due to lower thermal production and lower positive effect of price hedging
- Distribution DKK 1,311 million, up from DKK 1,137 million, mainly reflecting lower costs
- Markets DKK 3,268 million, up from DKK 1,345 million due primarily to increased gas sales, higher gas selling prices and a positive time lag effect driven by rising oil prices.
- Profit after tax was DKK 5,177 million versus DKK 2,211 million
"For the first nine months of 2008 earnings increased in almost all DONG Energy's business segments. Growth was particularly strong in Exploration & Production and Markets, predominantly reflecting increasing production from the Norwegian gas field Ormen Lange and a substantial positive time lag effect driven by the high oil prices during the period under review," said CEO Anders Eldrup, continuing, "Based on the strong financial development in the third quarter we expect our 2008 results to be significantly better than 2007 -
despite anticipated lower prices in international markets in the last quarter of the year."
Outlook for 2008
EBITDA and profit after tax for 2008 are expected to be significantly higher than 2007, when EBITDA was DKK 9.6 billion and profit after tax DKK 3.3 billion. The results reported for the third quarter exceeded the outlook
expressed in the interim financial report for the first half and more than make up for the fact that the fourth-quarter results are expected to be lower than forecast due to recent sharp falls in oil prices.