E.ON sees UK earnings rise 26%
Gas and electricity supplier E.ON increased UK underlying earnings by 26% to £296 million last year as it cashed in on a miserable spell of cold weather at the start of 2013, the company said today.
The German-owned firm said it had also benefited from a cost-cutting drive.
But earnings plunged at E.ON's UK generation business, as chief executive Tony Cocker warned that gas power stations were "barely profitable" with intensive investment needed to keep plants running.
Sales at the supply arm, which has around 4.8 million residential customers in the UK and also delivers energy to businesses, rose by 5.7% to £8.04 billion.
E.ON increased energy tariffs by an average of 3.7% from January this year, nearly twice the rate of inflation.
Though this was a lower rate than competitors, the disclosure of a sharp rise in profits is still likely to provoke public disquiet amid a continuing political focus on household energy bills.
But Mr Cocker said E.On was helping to deliver "real help for families and businesses", pointing to figures showing that as part of Government obligations on suppliers it had installed energy saving measures in more than 100,000 homes in the last 15 months.
E.ON is calling for the cost of the scheme to be funded through taxation rather than via a levy on individual customer bills.
Mr Cocker said the company supports the need for a full Competition Commission investigation into the sector. The sector is already being scrutinised by other regulators.
But he painted a gloomy picture on the future of power generation in the UK as earnings in E.ON's "upstream" division - calculated on an underlying earnings basis before various costs are taken into account - fell 34.3% to £388 million.
"Our lower EBITDA for the year reflects the fact that gas power stations are barely profitable and the considerable impact of the closure at the end of 2012 of Kingsnorth," he said.
"It ultimately reveals the new reality of running upstream and generation activities in Britain.
"Often the need for new development dominates the headlines and, whilst we continue to play our part in bringing new power generation online, the capital intensive nature of running existing plant should not and must not be ignored."
E.ON closed the coal-fired Kingsnorth station in Kent last year as a result of EU directive on polluting power stations.
Mr Cocker said it would continue to invest in Britain - with a new biomass station at Blackburn Meadows in Sheffield, environmental upgrades at coal-fired Ratcliffe, as well as wind farm developments and North Sea exploration.
Underlying earnings for the overall group - which has operations across Europe as well as in Russia and North America - fell 14% to 9.32 billion euros (£7.79 billion).
It said the results were in line with expectations, reflecting the "considerable adverse impact of our business and regulatory environment".