E.ON ups spending to $35 billion on optimistic outlook

By Christoph Steitz and Tom Käckenhoff

ESSEN, Germany/DUESSELDORF (Reuters) -E.ON, Europe's biggest operator of energy networks, plans to boost core profit by 12% and raise investment in its grids and retail businesses by a fifth to 33 billion euros ($35 billion) by 2027, it said on Wednesday, sending its shares to a one-year high.

The investment, which is mostly directed towards the company's power and gas networks, foresees the group's adjusted core profit rising to around 9 billion euros by then, the company said, an increase of around 12% compared with 2023.

The company said that the investments, which will make grids more efficient by enabling them to integrate renewable assets, would require more favourable regulation from lawmakers, who set returns for networks.

"We need to help Europe invest its way out of the crisis," E.ON Chief Executive Leonhard Birnbaum said. "However, we will only succeed in this if the framework conditions are systematically improved and adopted to the policy ambitions."

While the company said the continent's energy crisis wasn't over yet, its optimistic outlook sent its shares up 1%, the only gainer among Germany's blue-chips.

For 2023, E.ON is expecting adjusted group core profit (EBITDA) of 7.8 billion to 8.0 billion euros and adjusted net income of 2.3 billion to 2.5 billion euros, which analysts at Citi said was "strong short and medium term guidance".

E.ON proposed a dividend of 51 euro cents for 2022, in line with the Refinitiv forecast.

It confirmed 2022 adjusted EBITDA reached 8.1 billion euros, while adjusted net income was 2.7 billion.

Birnbaum reiterated, however, that it was too early to give the all-clear regarding Europe's energy crisis triggered by Moscow's war in Ukraine.

"Some may say now that prices have returned to a low level. I'd remind them that two years ago we would've considered the current price level to be incredibly high," Birnbaum said.

E.ON also cut to zero the value of its 15.5% stake in the Nord Stream pipeline, which was damaged in September in an act of sabotage. That was down from around 100 million euros at the end of September and 1.2 billion euros originally.

Moscow cut and later stopped supplies via the pipeline as Europe implemented sanctions against Russia.

($1 = 0.9314 euros)

(Reporting by Christoph Steitz and Tom Kaeckenhoff; Additional reporting by Vera Eckert; Editing by Shri Navaratnam, Elaine Hardcastle, Kirsten Donovan)