Germany’s E.ON, Europe’s second-largest utility, reported on Wednesday adjusted earnings before interest and taxes in the first nine-months rose 8%, slightly more than expected by the market.
Adjusted earnings before interest and taxes in the first nine months of the year rose to €7.70 billion, the Duesseldorf-based company said on Wednesday. “This will enable us to continue our growth strategy, even in the current financial crisis,” the company said in a statement.
Eighteen analysts in a Reuters poll had on average estimated adjusted EBIT would increase 6.9% to €7.64 billion. The company reiterated it expects adjusted EBIT and adjusted net income to rise 5 to 10% in 2008. The share reversed a 0.2% increase after the company released the results and dropped 1.2% to €29.20 at 1133 GMT.
Power prices in Germany, Europe’s largest electricity market, have doubled to a record €73.17 per megawatt hour in the past 12 months and are boosting profits at German utilities. Eight-year-old E.ON sees this as a long-term trend and is spending most of the €63 billion it plans to invest through 2010 on new power plants, putting large takeovers on hold in favor of small acquisitions in markets such as Russia or Turkey.
E.ON shares have dropped 26% in the past six months, worse then their European peers, with the DJ Euro Stoxx utilities index index sliding 21%. But they have fared better than German large-cap stocks, with the DAX index declining 28%.
The company, trading at 11 times estimated earnings, is valued lower than European peers such as GDF Suez, which trades at 13 times estimated earnings, or EDF, which trades at 18 times. (Reuters)