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Eon has said first-half profits will be more than treble the equivalent figure last year after Germany’s largest utility by sales cut a deal with Gazprom on long-term gas supply contracts.
The Düsseldorf-based company said on Tuesday that it expected to report about €3.3bn in underlying net income for the first six months of the year, compared with €900m a year ago. Earnings before interest, tax, depreciation and amortisation will be about €6.7bn, versus €4.3bn in the first half of 2011.
Eon said the increase was due to the Gazprom settlement as well as the lack of negative one-off effects linked to Germany’s nuclear phase-out that burdened results last year. “These effects will continue to show in the quarters to come,” Eon said.
The utility also confirmed the full-year guidance that it issued last month. Eon expects underlying net income to reach €4.1bn-€4.5bn in 2012 and an ebitda range of €10.4bn-€11bn.
Eon share’s rose 1.2 per cent to €17.83 in early afternoon trading in Frankfurt, extending a gain of some 12 per cent in the past three months. The stock remains more than 60 per cent below a peak reached at the beginning of 2008.
After almost two years of talks, Eon won price cuts in July on its oil-linked long-term supply contracts for Russian natural gas that run until 2036. These long-term contracts had eroded Eon’s profits as spot-market prices for gas were lower.
The agreement was backdated to the end of 2010. Eon said in July that the settlement would have a positive impact of about €1bn on its first-half results, due to be released with its full interim report on August 13.
Eon suffered heavy losses last year after the government decided to close immediately eight of Germany’s 17 nuclear power stations and hasten the closure of the remainder.
Eon is now trying to transform itself from a primarily European utility into a global energy provider. This year it committed to a joint venture in Brazil to build gas and coal-fired power plants. It is also looking for opportunities in Turkey and India.