FRANKFURT: E.ON, Germany's biggest power supplier, said Wednesday it returned to profit in 2012, when it booked net profit of 2.217 billion euros ($2.9 billion) compared with a loss of 2.219 billion euros a year earlier.
Underlying net profit, which was adjusted for one-off effects soared by 67 percent to 4.187 billion euros.
The difference between the two net profit figures reflected 1.7 billion euros in writedowns "necessitated by the general deterioration of our market environment and by instances of regulatory and above all fiscal intervention in our business in
Europe," explained chief financial officer Markus Schenck.
Operating profit, as measured by earnings before interest, tax, depreciation and amortisation (EBITDA) climbed by 16 percent to 10.786 billion euros on a 17-percent increase in revenues to 132.09 billion euros, E.ON said.
The company said it would raise the dividend payout to shareholders to 1.10 euros per share for 2012 from 1.00 euros a year earlier.
"Our solid 2012 results are gratifying but, in view of our extremely difficult market environment, aren't a reason for us to sit back and relax," said chief executive Johannes Teyssen.
"During the next few years things certainly won't be getting any easier for E.ON or, for that matter, for any other European energy supplier.
Power and gas demand in our core markets still hasn't recovered from the impact of the economic and financial crisis," Teyssen said.
One of the main reasons for last year's rise in underlying earnings was a significant improvement in the gas wholesale business following the renegotiation of gas-procurement contracts with producers, he said.
In addition, 2011 earnings had been adversely affected by one-off items relating to Germany's accelerated phaseout of nuclear energy.
Additional generating capacity in Russia and the cost-cutting measures "were also positive factors," while negative factors included lower prices and
sale volume in the power business, E.ON continued.
Looking ahead to the current year, E.ON said it expects to achieve EBITDA of 9.2-9.8 billion euros.
"This forecast factors in the loss of earnings streams through asset sales under our ongoing divestment programme," it noted.
Underlying net profit was projected to come in at 2.2-2.6 billion euros.
"Our business environment in 2013 is very difficult," warned finance chief Schenck.
"It is marked by the difficult business environment in the energy business, interventionist regulations, weak prices in Europe's generation markets, and pressure on gas margins," he said.
E.ON announced separately that Teyssen's contract as CEO had been extended for a further five years until the end of 2018.
On the Frankfurt stock exchange, E.ON shares were up more or less in line with the market, adding 0.08 percent in early afternoon trading.
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