DGAP-News: E.ON SE: E.ON stays on course in difficult environment

| Source: EQS Group AG
DGAP-News: E.ON SE / Key word(s): Final Results
E.ON SE: E.ON stays on course in difficult environment

12.03.2014 / 07:30


E.ON stays on course in difficult environment

  - 2013 business performance in line with expectations

  - EBITDA 1), underlying net income, and operating cash flow below
    prior-year figures

  - Management proposes dividend of EUR0.60

  - 2014 EBITDA1 expected to be between EUR8 and EUR8.6 billion

E.ON's results for the 2013 financial year were in line with expectations.
EBITDA declined by 14 percent year on year to EUR9.3 billion. It was
therefore inside the company's forecast range, as was underlying net income
of EUR2.2 billion. Cost savings delivered by the E.ON 2.0 program and
higher earnings at the Exploration & Production segments had a positive
impact on earnings. Negative factors included the absence of earnings
streams from divested companies and the market situation in fossil-fueled
power generation. In addition, 2012 had benefited from a one-off payment
relating to the renegotiation of gas-procurement contracts; this payment
did not recur in 2013. E.ON recorded underlying net income per share of
roughly EUR1.18. Management is proposing a dividend of EUR0.60 per share.

Cost reductions on schedule

"Our 2013 results clearly reflect the negative effects of a difficult
economic and regulatory environment in Europe. In particular, the
ramifications of policy decisions in Germany and the related insufficient
market prices for conventional energy continue to have an adverse impact on
our generation portfolio, which has long been a mainstay of our business.
That is why in 2013 we further intensified our efforts to systematically
adapt E.ON to the rapidly changing market situation," E.ON CEO Johannes
Teyssen said at the company's earnings presentation in Düsseldorf. Teyssen
talked in detail about the measures the company is taking to respond to
persistent market dislocations. "Our E.ON 2.0 program, which we launched
back in 2011, is right on schedule. We are achieving lasting cost
reductions across our company and tangibly improving our efficiency. By the
end of 2014 we will have initiated and largely completed most of its main
measures. We will achieve our targets."

Optimization of conventional portfolio

E.ON continually scrutinizes the profitability of its conventional
generation assets and, if necessary, withdraws them temporarily or
permanently. So far the company has decided to shut down nearly 13
gigawatts of capacity, which is more than a quarter of its conventional
fleet in Europe.

Divestment program successful

E.ON further optimized its business portfolio in 2013. In has now generated
about EUR20 billion from the sale of noncore assets, thereby surpassing its
original target of EUR15 billion by a wide margin. These successful
divestments give E.ON financial flexibility and enable it to focus even
more closely on current challenges and opportunities.

Further reduction in debt

E.ON's economic net debt declined by approximately EUR3.8 billion, from
-EUR35.8 billion at year-end 2012 to -EUR32 billion at year-end 2013. Its
net financial position improved from -EUR14.4 to -EUR11.5 billion. The main
reason for the improvement was that substantial disposal proceeds along
with positive cash flow of EUR6.4 billion were fully sufficient to cover
investment expenditures and E.ON SE's dividend payout. E.ON plans to
generate positive free cash flow (defined as operating cash flow minus
investments and dividends) starting in 2015, in part by enhancing
efficiency and sharpening the focus of its investments.

Careful, selective investments

In the next few years E.ON's business will only generate limited funds for
new investments. Alongside necessary maintenance and network investments,
going forward the company will focus in particular on expanding growth
businesses like renewables and distributed-energy solutions. "We are
investing very carefully and selectively in our new businesses and keeping
risks to a minimum," Teyssen said. "But I would like to add that not making
investments is not an option for us. Our company's transformation must
continue, particularly in difficult times. It's the only way for us to lay
the foundation for future earnings."

Clear dividend policy

E.ON is maintaining its transparent, consistent dividend policy in 2013 as
well and has reiterated its target of payout ratio of 50 to 60 percent of
underlying net income. At the Annual Shareholders Meeting, the Board of
Management and Supervisory Board will propose a dividend of EUR0.60 per
share for the 2013 financial year, which corresponds to a payout ratio of
51 percent of underlying net income. Furthermore, shareholders will be
offered the option to exchange the cash dividend partially into E.ON
shares. E.ON plans for its dividend payout to be within this target range
in the future as well.

New Board of Management compensation plan showing effects

Under the new Board of Management compensation plan, which was approved at
last year's Annual Shareholders Meeting by a more than 90 percent majority,
the earnings decline is appropriately reflected and, on a like-for-like
basis, leads to a roughly 25 percent decline in bonuses. For example, the
CEO's effective compensation for 2013 declined by just under EUR1 million.
Furthermore, all members of the Board of Management must invest one third
of their annual bonus in the company for four years and therefore depend,
like shareholders, to a significant degree on the company's value

Business environment remains difficult

In view of a continued difficult business environment, E.ON expects
full-year 2014 EBITDA1 to be between EUR8 and EUR8.6 billion and underlying
net income to be between EUR1.5 and EUR1.9 billion. The forecast factors in
the loss of earnings streams through asset sales under the company's
divestment program. The start of the new power regulation period in Germany
and earnings declines at the Russia unit (due to adverse
currency-translation effects) and at the Global Commodities unit are
further adverse factors. The positive factors include the expansion of
production at Exploration & Production and further cost reductions from the
E.ON 2.0 efficiency-enhancement program.

1) Adjusted for extraordinary effects.

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
does not assume any liability whatsoever, to update these forward-looking
statements or to conform them to future events or developments.

End of Corporate News


12.03.2014 Dissemination of a Corporate News, transmitted by DGAP - a
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Language:    English                                                    
Company:     E.ON SE                                                    
             E.ON-Platz 1                                               
             40479 Düsseldorf                                           
Phone:       +49 (0)211 4579-0                                          
Fax:         +49 (0)211 45 79-5 01                                      
E-mail:      investorrelations@eon.com                                  
Internet:    www.eon.com                                                
ISIN:        DE000ENAG999                                               
WKN:         ENAG99                                                     
Indices:     DAX, EURO STOXX 50                                         
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