E.ON AG (NASDAQ:EONGY, ETR:EOAN) is a German energy company with global upstream and downstream natural gas and electricity operations (upstream is involved in production, downstream is involved in marketing, distribution and refining). As a utility company (provides water and electricity) it is a major player in Germany and Central Europe (E.ON Energie (also sells natural gas) has 17 million customers, 28,750 MW generating capacity, a leader in Germany along with RWE, 3rd largest power producer in Belgium). It also has a siginificant gas business (produces, refines, markets, distributes and sells) that it runs directly (and through subsidiaries like E.ON gas in the UK and Hungary) or through minor stakes in very large companies like Gazprom (like the 3.5% $4 billion interest that it had in Gazprom that was sold December 1, 2010 to Vneshtorgbank for $4.5 billion, €3.4 billion). Even though it is the 2nd largest CO2 emitter in Europe and has raised criticism by attempting to open the UK's first new coal plant in 30 years, it has a growing renewable energy business (in 2009 introduced a directive of bringing generating capacity from renewable fuels to 24% by 2030), as of August 2010 its 1st concentrated solar plant (CSP) was half completed, hasn't sold US Renewable Energy business despite spinning off large portions of other American subsidiaries) In Rotterdam its new coal plant is one of the most efficient in the world (thermal efficiency of 46%). It has 1 million km of distribution networks (112,000 for natural gas), a gas supply of 624.1 billion kWh (Norway and Russia have over half), generation capacity of 73 GW (renewable energy is 3.1 GW) and produces 1.4 billion cubic meters of natural gas annually.
When used 1h10 means 2010 first half
The company has traditionally been divided up into 7 market units however more recently the company has started dividing up the 7th market unit (New Markets) into 4 due to the size and growing importance of each one. The business segments (all are called market units) are thus;
|Key Financial Metrics (€ million)||2005||2006||2007||2008||2009||1HFY09||1HFY10||% Change (Interim 09-10)|
Revenue from the Climate and Renewables business was 31% higher (even though prices were lower) due to higher capacity abroad in the US and Italy (though Italian operations had less business coming from energy trading) and higher electricity prices and colder weather in Russia (where sales were 40% more than the corresponding period in 2009). Adjusted EBIT rose €591 million or 10.77% (the result of better retail, energy trading margins (specifically in Russia and Spain) and a higher generation capacity.
Other factors affecting results
2009 Sales fell 6% because of a lower volume of gas sales, lower volume of nordic nuclear and hydro production and lower gas prices. Numbers for Central Europe operations were affected the changing of divisions for French operations (segmented differently than the year before) and Romanian gas operations. Currency and price effects as well as volume changes due the economic climate were instrumental in bringing European Gas revenue down 25%. New Markets was the only market unit to record a significant increase in numbers rising 32% overall (Spain 144% growth though Russia fell 7%) in sales and tripling adjusted EBITDA.
Power sold (net of owned generation, purchases and station use, line loss) in sectors and countries represented by New Markets rose from 16.2 to 93.1 between 2007 and 2008. 2007 to 2008 owned generation in new markets increased from 15.9 to 75.2 billion kWh.gdf suez gave it 900 MW's of increased capacity) and in France (asset swap with Electricite de France gave it procurement rights and complete ownership of SNET, France's only non state owned generation company).
Production started at the Rita gas field (200 million cubic meters annually) which is supplying Britan with natural gas.
Market access in Germany was expanded as a result of NetConnect Germany, a new company formed by E.ON Gastransport and Bayernets as a joint venture. Gas pipeline networks in Germany were subsequently merged with those of other companies creating the biggest pipeline network in Germany improving market access for the sale of gas. 1hfy10 half of gas sales were made by E.ON Ruhrgas AG 1hfy10 owned generation was steady but saw major decreases in Italy (6.2 from 8.1) and Spain (4.6 from 5.4) but major increases in Climate & Renewables (3.8 from 2.5) and Russia (27.7 from 26.1 bil kWh).  The company also participated in a 12 month field test in electromobility by providing hybrid car recharging stations.
E.ON is one of the largest carbon emitters in Europe among companies. If the company surpasses its allowance it would be fined €100 per ton. Emissions are measured in units of Certified Emission Reduction (CER).
|Company||Revenue (€ millions)||Generating Capacity||Power Stations (wind farms)||Net Income|
|Electricité de France||95,072 ||127 ||3 (2) ||5,858 |
|E.ON||81,817 ||68.475 (2010)|
73 GW 2009
|23 (19) ||8,645 |
|Scottish and Southern Energy||£ 25,424 ||11.1 GW ||20 (9) ||£ 1,186|
|RWE AG||47,741||49.58 GW ||35 (21) ||3,571 |