rotating for energy supply

DGAP-News: E.ON SE / Keyword(s): Annual Report
16.03.2022 / 07:00
The issuer is solely responsible for the content of this announcement.

E.ON: turning point for energy supply

  • CEO Birnbaum: ensure security and accessibility of short-term supply; reduce energy dependence and significantly develop hydrogen and renewable energies in the long term

  • The Group’s adjusted EBITDA amounts to around €7.9 billion in 2021; adjusted net income increases by 53% to around 2.5 billion euros

  • E.ON’s business model drives the energy transition; 97% of its investments in 2021 were aligned with the taxonomy; investments of 5.3 billion euros in 2022 and 27 billion euros until 2026

At the company’s annual results press conference today, E.ON CEO Leonhard Birnbaum strongly condemned the attack on Ukraine. “The war of aggression against Ukraine is a terrible throwback to dark times. We condemn war and violence and fully support European Union sanctions. Our hearts go out to the people of Ukraine who are currently suffering from war and the need to seek refuge.”

Birnbaum also pointed out that E.ON not only provides millions in short-term humanitarian aid, but also takes responsibility for jointly shaping Europe’s future energy supply. “The war is painful proof that Europe faces the long-term task of reducing its dependence on Russian energy. But there are also answers. Europe must diversify its imports of energy. This includes LNG as well as hydrogen. And Europe must move forward even more resolutely in its green energy transition.”

In the short term, however, it is about maintaining energy security for the next two years. Birnbaum said: “We also need to ensure energy accessibility. For both households and industry. There are no easy solutions, and Germany cannot afford to adopt either. an ethically purist position if it does not want to jeopardize its industrial base and This is why I welcome the cautious approach of the German government.

2021 results exceed expectations

The company’s business continued to perform very well in 2021 despite a choppy market environment and the second year of the Covid pandemic. Chief Financial Officer Marc Spieker said, “E.ON successfully ended the year and exceeded expectations, further strengthening the financial basis for future growth.

E.ON increased the Group’s adjusted EBITDA by €1 billion to €7.9 billion. One of the growth drivers was the Customer Solutions segment, which increased its EBITDA by 45% to 1.5 billion euros, partly thanks to the successful restructuring of its UK operations. The Energy Infrastructure Solutions unit, whose EBITDA increased by 40% year-on-year to reach 480 million euros, is becoming an increasingly key growth activity. The Future Energy Home unit, whose offerings include solar panels and battery storage devices, also saw increased demand: the number of devices installed rose from 100,000 to 125,000 in a single year. The Group’s results were also positively influenced by the non-strategic activities: the particularly high capacity utilization of the power plants and the current price level on the sales side made a contribution, especially in the fourth quarter. Energy Networks’ earnings mainly reflect positive weather conditions, the absence of negative effects from the pandemic and anticipated regulatory developments in the network business in Germany.

E.ON defies rising energy prices in 2021

The earnings impact of the increasingly extreme situation in the energy markets in the second half of 2021 was manageable for E.ON. Higher costs for line losses in Sweden and Central and Eastern Europe had a temporary adverse effect at Energy Networks. The regulatory mechanisms in these countries will lead to the recovery of these costs over several years. E.ON’s Customer Solutions segment is consciously pursuing a cautious sourcing strategy for all energy sales markets and has therefore weathered the exceptional situation in the commodity markets well with only a slight negative impact on earnings. .

Debt drops dramatically

E.ON reported adjusted net profit of 2.5 billion euros in 2021, 53% more than in 2020 and 100 million euros above the upper limit of the forecast range that E.ON .ON increased last fall. Economic net debt decreased by almost €2 billion compared to the end of 2020 to €38.8 billion. The improvement in net economic debt is mainly due to a decrease in provisions for pensions. Strong FY2021 results and reduced economic net debt have already enabled E.ON to reduce its leverage factor to 4.9, which is within its target range of 4.8 to 5, 2 times EBITDA for a strong BBB/Baa rating.

Sustainability at the heart of E.ON’s strategy

Chief Financial Officer Marc Spieker also highlighted that E.ON has made significant progress in achieving its sustainability goals. “Our advanced energy solutions have reduced our customers’ carbon emissions by 107 million metric tons. Our own carbon emissions in 2021 have fallen to 9.4 million metric tons. We have also become a partner of the United Nations in as a pioneer in the ecological management of power line corridors and create valuable biotopes under 13,000 kilometers of high voltage lines.”

Investments support Europe’s energy transition

During the presentation of its growth strategy last November, E.ON announced that it would significantly increase its investments in order to accelerate the growth of its profits. E.ON plans to invest 5.3 billion euros in 2022 and a total of 27 billion euros until 2026. More than three quarters of these investments will go to energy networks. A double-digit percentage is reserved for energy infrastructure solutions.

Spieker said, “97% of our taxonomy-eligible investments in 2021 were taxonomy-aligned. Our investments are thus paving the way for a green energy future and supporting political objectives in the fight against climate change. E.ON is by far the largest transmitter in Germany. corporate green bonds.

Launch of strategic reviews

In line with its strategy, E.ON continuously reviews its portfolio to advance its strategic agenda of sustainability, digitalization and growth. In this regard, E.ON has decided to initiate the process of examining strategic options for its district heating activities in Norrköping and Örebro in Sweden, including the possibility of a divestment. E.ON’s other district heating activities are not part of this review. E.ON is also initiating a process to assess the possibility of finding a co-investor to support the growth of Westenergie’s broadband infrastructure business. It is uncertain whether these reviews will result in transactions and E.ON will provide a further update if and when appropriate.

Forecast subject to future impact of war

E.ON has released its earnings forecast for fiscal 2022 with the caveat that the short and long-term impact of the war in Ukraine on its business performance and key performance indicators cannot be fully currently estimated.

Under these circumstances, E.ON expects to record an adjusted EBITDA of 7.6 to 7.8 billion euros in 2022. Spieker pointed out that, despite the decline in nuclear energy revenues, this objective will be mainly achieved through significant organic growth of E.ON’s core business. E.ON also intends to achieve €400 million in additional synergies through the integration of innogy. This earnings forecast does not yet include portfolio optimization measures. E.ON announced in November 2021 that it would divest €2-4 billion of assets to fund growth through 2026, primarily through smaller portfolio adjustments.

Spieker expects E.ON to post adjusted net profit of 2.3 to 2.5 billion euros in 2022, which corresponds to earnings per share of 88 to 96 cents. He also reaffirmed E.ON’s 2021 dividend proposal of 49 cents per share and its goal to increase the dividend by up to 5% per year through 2026.

This press release may contain forward-looking statements based on current assumptions and forecasts made by E.ON Group management and other information currently available to E.ON. Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results, financial situation, development or performance of the company and the estimates given here. E.ON SE does not intend, and assumes no responsibility, to update these forward-looking statements or to align them with future events or developments.

16.03.2022 Broadcast of a Corporate News, transmitted by the DGAP – a service of EQS Group AG.
The issuer is solely responsible for the content of this announcement.

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