German utility E.ON, has recorded a net loss of €16bn for 2016 — the largest in its history — and unveiled ambitious measures to reduce debt by €7bn through asset sales and cutting 1300 jobs.
The loss mainly reflects E.On's move away from generating electricity from fossil fuels and a greater focus on renewable energy. Charges last year included a €13bn write down on the value of its recently spun-off power business Uniper, which consists of E.ON’s former fossil fuel interests, and a payment of €2bn towards covering the costs of disposing of and storing Germany’s nuclear waste following its phase-out nuclear energy.
E.ON’s CEO, Johannes Teyssen, was keen to present the loss as a clearing of the decks as the company embarks on a new kind of future. The €16bn loss, he said, “marks a new chapter in the company’s evolution. “2016 was a transitional year.” The impact on the company’s balance sheet from the Uniper spin-off and the nuclear deal with the government “marks a turning point and clears E.ON’s way into the new energy world”, he said.
A company spokesman said: "E.On has now fully accounted for the impact of its new strategy. Its balance sheet for the 2016 financial year will be the last to reflect the burdens of the past."
The full-year figure is more than double the €6.3bn loss it reported in the previous year. However, stripping out one-off costs, E.On reported a profit of €3.1bn. The company has promised to reduce its debt by €7bn to around €20bn.
Eon’s results come less than a month after rival German utility RWE revealed a €5.7bn loss for 2016 — the largest in its 119-year history — and said it was scrapping its dividend for the second year in a row.
Professor David Elmes of Warwick Business School, and Head of the Global Energy Research Network, commented: "E.On would desperately like to draw a line under the old company that generated electricity from fossil fuels and now be seen as a new company with a mix of energy services and renewables. Today’s results throw many of the problems that change created into a huge loss, hoping markets will swallow it and let the new company flourish.”
“All the [large] power companies in the UK and their competitors across Europe are shifting their focus to more sustainable energy. That’s often driven by government policies that set a pace of change which is faster than we've historically changed the energy we use. Researchers talk of energy transitions taking 20-30 years and we’re making that change in half that time or less. That means there’s a cost and that’s part of the bills we pay.”