Despite the economic crisis, it looks like it's going to be a good year for German energy giant Eon.
The Duesseldorf-based company on Wednesday announced better-than-expected first-half profits. Compared with the first half of 2008, the energy supplier's adjusted earnings before tax and interest fell just 1 percent to $8 billion during the first half of 2009, Eon said. Because of the economic crisis and the resulting drops in electricity and gas consumption, analysts had expected a much bigger drop.
Duesseldorf-based Eon, the world's largest utility, also reported a sales increase by $1.8 billion to $60 billion, mainly because of its foreign-based operations. It said its business in Russia, Italy, Spain, France, and the new division Climate and Renewables performed especially well.
Its Russia business was boosted by the further liberalization of the Russian energy market, whereby now "half of the electricity sold to large industrial and commercial customers is priced by market mechanisms," the company said in a statement.
Climate and Renewables performed significantly better than the year before, mainly due to a substantial increase in installed generation capacity.
Eon even increased its earnings in Germany, where the company together with RWE, Vattenfall and EnBW is responsible for 85 percent of the electricity generation.
The German government's Monopoly Commission recently issued its new report, which found that there still isn't enough effective competition in Germany's retail gas and electricity markets. As a result, Germans, the commission said, are paying unnecessarily high energy prices.
Meanwhile, Eon said it expects yearly sales to reach 2008 levels, causing Eon shares to grow substantially in Wednesday trading in Frankfurt.
The company reiterated its investment pledges. The company has invested more than $25 billion over the past years and wants to spend some $42 billion more until 2011.
The first-half results were presented two days after the company announced that Johannes Teyssen, Eon's chief operating officer, would succeed chief executive officer Wulf Bernotat, 60, in May 2010.
Teyssen, 49, has long been favored to get the job; he has worked within Eon for the past two decades and is the key person behind the company's cost-cutting program. Besides aiming to increase efficiency across its entire value chain, Eon plans to divest at least $18 billion in assets by 2010.
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