EXCLUSIVE - E.ON sees bleak years to come - sources
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)
- Tweet this
- Share this
- Digg this
- China building South China Sea island big enough for airstrip - report
- China's rate-cut likely to hurt banks, curb new loans to small borrowers
- Pakistani family sentenced to death over "honour killing" outside court
- Hitler watercolour fetches 130,000 euros at Nuremberg auction
- Magnitude 6.8 quake hits central Japan; no tsunami warning
Prime Minister Narendra Modi has a long list of pro-growth measures to implement over the next four months, but time may have already run out to breathe enough life into the economy to meet the tough 2014/15 fiscal deficit target without cuts. Article