Germany's EON clocks up record loss in 2016

BERLIN: German energy giant EON said Wednesday that it booked a record loss of 8.45 billion euros ($9.0 billion) in 2016 after massively overvaluing its fossil fuels division which was spun off late last year.

The previous year, EON had already run up a bottom-line loss of almost seven billion euros.

EON said in a statement that it took a charge of 11 billion euros against the spin-off of its gas and coal power plants into a new subsidiary, Uniper, floated on the Frankfurt stock market last autumn.

But the energy firm also pointed to operating, or underlying profit of 3.1 billion euros excluding such special items as proof of its "robust" core business.

"The impact on our balance sheet (in 2016) marks a turning point and clears EON's way into the new energy world," chief executive Johannes Teyssen commented.

Looking ahead to 2017, the group aims to make a net profit of between 1.2 billion and 1.45 billion euros, adjusted for special items.

In a display of confidence, EON executives will offer a dividend of 0.21 euros per share for 2016, and promise to increase the payout to 0.30 euros for this year.

Like other European competitors, EON has suffered in recent years from low wholesale electricity prices, competition from subsidised renewable energy, and the German government's decision to ditch nuclear power by 2022.

The group decided to spin off its fossil fuels operations and hold on to gas and electricity networks, its own renewable generators, and customer service -- a similar strategy to its biggest German rival, RWE.

EON aims to reduce costs by 400 million euros per year by 2018, including by slashing around 1,300 jobs -- 1,000 of them in Germany -- out of a total of 43,000.