E.On AG returns to profit in 3rd

Benefit from stronger operations in Britain and Scandinavia returned German power utility E.On AG to profitability in the third quarter.

Photo: E.On AG returns to profit in 3rd

Net profit at E.On, the world's largest investor-owned utility by market value, came to €1.35 billion (US$1.97 billion) in the three months to Sept. 30. That compared to a loss of €5 million in the same period last year, when earnings were hurt by the revaluation of energy derivatives and a negative impact of network regulation in the German gas market.

The company also said the third-quarter result would contribute to an increase in its full-year earnings, predicted to be more than the €5.06 billion (US$6.9 billion) it earned in 2006.

Sales in the third quarter rose 15 percent to €13.85 billion (US$20.19 billion).

Chief Executive Wulf Bernotat told reporters the company's profits were due to a spike in the price of energy in Germany, as well as in Britain and Scandinavia, but defended E.On's profits in the face of criticism that it was benefiting while customers were paying more.

"Europe and Germany need large and strong companies who are willing to provide the necessary investment in the energy sector and are able to keep up in the international energy markets," Bernotat said.

He insisted that Germany was also profiting from the company's gains, noting that E.On had provided 4,700 new jobs in 2006 and another 7,600 so far this year.

Although an estimated 100,000 customers have fled E.On's traditional German services since January, some 250,000 have signed up for its budget electricity and natural gas retail unit - dubbed "E Wie Einfach" ("E For Easy") - launched in February.

Net profit in the first nine months of the year rose 70 percent to €5.78 billion (US$8.4 billion) from €3.4 billion, exceeding the €4.97 billion (US$7.25 billion) forecast by analysts polled by Dow Jones Newswires.

Adjusted for book gains and losses on disposals, restructuring expenses and other non-operating gains and charges, profit over the first three quarters came in at €4.2 billion (US$6.1 billion) compared with €3.4 billion, E.On said.

In the first nine months, sales increased 6.7 percent from the same period a year earlier to €49.41 billion (US$72 billion), compared with the €49.55 billion forecast by analysts.

Shares of Duesseldorf-based E.On fell 0.3 percent to €134.64 (US$196.67) in Frankfurt.