FRANKFURT Germany's largest utility, E.ON AG (EONGn.DE), warned it was reviewing its earnings outlook for 2013, citing weak economic conditions that have hurt the energy industry.
"Considering the substantial economic risks and the structural changes of the industry sector (the outlook) no longer seems to be achievable," E.ON said late on Monday in an unscheduled statement after market closing.
E.ON had forecast earnings before interest, tax, depreciation and amortization (EBITDA) of 11.6 to 12.3 billion euros ($14.7 to 15.6 billion), underlying net income of 3.2 billion to 3.7 billion and a dividend of at least 1.10 euros per share for next year.
Analysts on average expect the group's EBITDA to reach 11.45 billion euros next year, while underlying net income is seen at 3.43 billion.
Weak demand for electricity because of Europe's economic crisis has reduced revenue and utilization of capacity at the power plants of German utilities and has curbed their trading activities.
According to the International Energy Agency (IEA), total primary energy demand in the EU is expected to decline by 2 percent in the 2010-2015 period, compared with a 10 percent rise globally over the same period.
The German year-ahead power delivery contract, the benchmark in wholesale trading, currently is at its lowest in two years at around 47.80 euros a megawatt hour, down more than 10 percent year-to-date.
HEADWINDS WILL PERSIST
German energy group are also grappling with the nuclear phase-out that was decided by Chancellor Angela Merkel last year, following the Japan's nuclear disaster in Fukushima that was caused by a 9.0-magnitude earthquake and subsequent tsunami.
"We believe the headwinds will persist," Citi analyst Sofia Savvantidou said, keeping a "sell" rating on E.ON and adding the news would also weigh on peer RWE (RWEG.DE), which is due to release nine-month results on Wednesday.
On Friday, EnBW (EBKG.DE), Germany's No.3 utility, had pointed to lower power prices and the phase-out of two nuclear plants as factors depressing core earnings.
Aside from its 2013 outlook, E.ON also said it put under review its "statements for 2015", without specifying. Last year, E.ON said it saw an EBITDA of 12.5-13.0 billion euros in 2015.
The group stuck to its 2012 outlook, still expecting EBITDA of 10.4-11.0 billion euros, underlying net income of 4.1-4.5 billion, and a dividend of 1.10 euros a share.
E.ON is scheduled to release nine-month earnings early on Tuesday, with nine-month EBITDA seen up 29.3 percent at 8.47 billion euros, according to a Reuters poll. ($1 = 0.7867 euros)
(Additional reporting by Tom Kaeckenhoff in Duesseldorf; Editing by David Cowell and M.D. Golan)