E.ON’s Uniper unit records large first half loss

German utility E.ON’s corporate restructuring decision is under the microscope after it was announced that the company’s newly launched Uniper unit suffered a $4.4bn loss for the first half of this year.

The result is due to write-downs on its power generation and gas storage assets and presents a difficult scenario for the unit ahead of the new entity being floated next month.
Uniper sign
Low power prices and the ongoing transition to renewables continue to impact and the company is also set to see further difficulty in paying for disposal of its nuclear power assets, as stipulated by the German government.

Corporate restructuring saw E.ON divide into two with conventional coal and gas-fired power and energy trading assigned to Uniper and renewables, networks and customer solutions businesses remaining with E.ON.

It said it recorded a net loss of $4.4bn (€3.9bn) for the period, mainly attributable to impairment charges of about $3.2bn (€2.9bn) in its power generation and gas storage businesses in Europe and to a provision of $1bn (€900m) for contracts on gas storage facilities.

Adjusted earnings before interest, taxes, depreciation, and amortization (ebitda) in its generation segment declined by about a fifth to $451m (€400m).

Financial Times reports that the company’s international power division also saw a sharp decline in earnings, with adjusted ebitda falling from €150m to just €5m this year, largely due to the effects of a fire at the company’s Berezov power plant in Russia. 

Klaus Schaefer, Uniper’s chief executive said in a statement that the first-half results “provide a good basis” for the company’s listing in September. He said the recent increase in wholesale power prices was “encouraging”. “So we enter the run-up to the listing with some momentum on the operational side.”

Martin Brough, an analyst at Deutsche Bank, told Power Engineering International, "As expected the Global commodities division was strong on trading and the gain on the gas contract settlement with Gazprom. The International Power business was weak on a write down, although the start of insurance payments in Q4 should help to improve the FY figure. Net debt was lower than we had expected although it may rise again in H2 depending partly on injections into gas storage. The company reported an overall P&L loss of €3.9bn reflecting the book value write down E.ON has already published in its H1 results."

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