EXCLUSIVE - E.ON sees bleak years to come - sources

FRANKFURT Tue Nov 9, 2010 11:54pm IST

Related Topics

Stocks

   

FRANKFURT (Reuters) - Germany's E.ON(EONGn.DE), the world's largest utility, sees three years of declining earnings, people with knowledge of the matter said on Tuesday, disappointing current market forecasts.

To revive growth Chief Executive Johannes Teyssen will on Wednesday reveal an additional 600 million euros ($835 million) in cost cuts from 2013, the sources said.

Teyssen's presentation on Wednesday heralds an era of shrinking business for a group that has seen a decade of almost constant growth.

"The fat years are over," said one of the sources, who declined to be identified as E.ON's latest strategy and expectations were still confidential.

Adjusted earnings before interest and taxes will drop in each of the next three years by a single digit percentage point, the sources said.

Analysts are expecting a steep drop in earnings next year but are estimating a renewed rise again in 2012, according to Thomson Reuters StarMine Estimates.

They expect earnings to drop again in 2013, but to still

remain higher than in 2011, when the slide started, according to the estimates.

StarMine weights analysts' forecasts according to their track record.

The company plans to sell divisions such as its British power grids -- once considered part of E.ON's main business -- to stem the slide in profits, the people said.

E.ON shares were down 0.7 percent at 22.18 euros at 1639 GMT on Tuesday, while the STOXX 600 European utilities index was up 0.1 percent. Shares in local rival RWE were down 0.4 percent at 50.44 euros.

A spokesman for E.ON declined to comment.

(Editing by Greg Mahlich)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Markets

REUTERS SHOWCASE

Segway in India

Segway in India

Segway’s India business pegs hope on tech-savvy Modi  Full Article 

Power Outage

Power Outage

Mumbai hit by power cuts  Full Article 

Commodities

Commodities

Gold imports, premiums to jump on festive demand - top refiner  Full Article 

Economic Worries

Economic Worries

Pakistan's promises to IMF in doubt as protests sap economy   Full Article 

Islamic Finance

Islamic Finance

Basel III deposit challenge looms over Islamic banks   Full Article 

Antitrust Probes

Antitrust Probes

U.S. business lobby says concerned China antitrust probes unfair.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage