Fossil fuel write-downs help push E.ON €3bn into the red

GERMANY energy giant E.ON has reported half-year net losses of €3bn (£2.6bn), after booking large writedowns on the power station and energy trading business it is spinning off.

E.ON won shareholder approval in June to form a new company, Uniper, which is set to be demerged and listed on the Frankfurt stock exchange next month. This will contain its gas and coal-fired power plants, which have been hit by the rise of heavily subsidised renewable energy.

Charges linked to Uniper’s listing totalled €3.8bn, including €2.9bn worth of write-downs on fossil-fuel burning power stations and natural gas storage assets, in addition to provisions of €900m. These charges, as well as an 11pc decline in revenue to €20.25bn, swung Germany’s biggest utility into a net loss of €3.03bn in the six months to the end of June, against a profit of €1.15bn in the same period last year.

Its shares fell by 3.7pc to €9.08 yesterday, making it the biggest loser on the DAX index. E.ON shares have gained 1.7pc this year compared with a 0.7pc drop for the benchmark index.

E.ON’s decision to offload its conventional energy division to Uniper is a radical response to Germany’s pioneering shift from conventional fossil-fuel and nuclear energy towards wind and solar power generation, a transition which is squashing wholesale electricity prices and eroding the profitability of traditional utilities.

Renewables and German nuclear power plants will be the focus of E.ON’s operations.

Initial plans to include its nuclear plants in Uniper were shelved last autumn after the German government proposed making firms permanently liable for the costs of decommissioning reactors.