EON, Germany’s biggest utility by market value, said first-quarter profit fell 13% after power prices dropped and disposals reduced revenue.
Underlying net income fell to 1.22billion euros ($1.68 billion) in the first quarter from 1.41billion euros a year earlier, the Dusseldorf-based company said. Sales slid 11%to 31.8billion euros.
“Results of all European utilities were weak due to the mild winter,” said Thomas Deser, a fund manager at Union Investment responsible for overseeing its stake in EON.
“It’s positive that (the exploration and production unit) significantly increased earnings before interest and taxes and that EON has sold 60%of electricity for 2016 at an average price of 40 euros. That’s a good price.”
German Chancellor Angela Merkel’s shift toward renewables and away from nuclear has led to a surge in wind and solar generation, cutting power prices already weakened by slow European economic growth.
EON, expanding abroad as it considers closing plants at home, plans to reduce capital spending and is selling assets to cut costs.
EON reiterated its 2014 outlook of underlying net income of 1.5billion euros to 1.9billion euros.
“We’re reducing our debt and costs, without neglecting investments in our future,” chief financial officer Klaus Schaefer said in a statement.
Net debt fell 1.4% to 31.1billion euros from a year earlier.
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