Business Forum • 16 August, 2024 at 9:37 AM
In the first half of 2024, E.ON delivered results in line with the Group's annual targets. As planned, the company further increased its investments compared to the previous year, made progress in digitalization, and systematically helped its customers reduce their carbon emissions. This performance underlines once again E.ON's ambition to lead and shape Europe's energy transition.
E.ON CEO Leonhard Birnbaum: "Having delivered on-plan results in the first half of 2024, we are on track to achieve our full-year group targets. As the largest distribution system operator in Europe, serving 47 million customers and delivering smart energy solutions, we want to be the company that makes new energy work in Europe. We accept this challenge and we deliver results. Our foundation is E.ON's operational performance and strong balance sheet, reflected in the figures published today. Our ambitious investment program is how we are making our contribution."
Revenue performance in line with full-year expectations
As anticipated, the Group's adjusted EBITDA of approximately €4.9 billion for the first six months of 2024 was below the high level recorded in the previous year, which was characterized by positive cyclical effects (H1 2023: €5.7 billion). E.ON's investment-driven growth and good operating performance in the current fiscal year were overshadowed by the absence of these cyclical effects. E.ON believes it is on track to achieve full-year 2024 forecasts and continues to expect Group adjusted EBITDA of between €8.8 billion and €9.0 billion.
Group adjusted net income amounted to approximately €1.8 billion in the first six months of 2024 (H1 2023: €2.3 billion). For the full year 2024, adjusted net income is expected to be between €2.8 and EUR 3.0 billion. This corresponds to earnings between €1.07 and €1.15/share.
E.ON CFO Nadia Jakobi: "In the first half of the year, E.ON again delivered good operating results, with Group adjusted EBITDA of €4.9 billion, which is fully in line with plan. This positive development is based on the successful implementation of our investments, which we increased by more than 20 percent year-on-year to €2.9 billion, with a focus on the regulated area of the business. We will continue to systematically drive this growth based on our investment program. We therefore fully confirm our forecasts for the Group."
Adjusted EBITDA of the Energy Networks division in the first half of the year totaled approximately €3.3 billion (H1 2023: €3.4 billion). Effects of a temporary nature, mainly related to redispatching costs in Germany, had a significant positive impact on the prior-year earnings of this business division. Over time, E.ON passes these effects on to its customers through network tariffs. In addition, milder temperatures in the first half of 2024 led to a decline in the volumes of energy transported. Higher costs in the generation area also temporarily negatively impacted results. In contrast, gains were boosted mainly by higher investments in the expanding network infrastructure. In the first half of 2024 alone, E.ON added around a quarter of a million new connections to its networks across Europe.
The Energy Retail division's adjusted EBITDA in the first half of the year fell to around €1.4 billion (H1 2023: €2 billion). This reflects the normalization of earnings as anticipated. In comparison, H1 2023 was characterized by exceptionally high one-off effects. In addition, milder temperatures in some areas resulted in lower sales volumes compared to the previous year. The expected increase in market activity also contributed to this earnings trend. Despite the challenges in the market, E.ON was able to hold the number of customers in energy sales steady.
The Energy Infrastructure Solutions (EIS) division brings together E.ON's operations to decarbonize the energy supplied to business customers, cities and communities. EIS earnings in the first half of the year decreased year-on-year to around €250 million (H1 2023: around €320 million). Positive cyclical effects in the prior period were the main factor. In addition, energy sales were temporarily lower than in the previous year, partly due to milder temperatures and maintenance work on heating and power supply systems. Demand for decarbonization solutions continues to be high. In the first half of 2024, E.ON has been selected to deliver a number of innovative projects, including the installation of a low-carbon heating network in east London. Once completed, this network will reduce the annual carbon footprint by around 4,000 tons of CO₂.
Significant increases in investment, workforce and digitization
E.ON invested €2.9 billion in the energy transition in the first half of 2024, a significant increase of more than 20% or €500 million year-on-year.
The majority of these investments - around €2.1 billion - were directed towards the expansion, modernization and digitization of network infrastructure. E.ON thus increased its investments in networks by around €260 million compared with the same period last year. Investments in Energy Retail and Energy Infrastructure Solutions were also significantly higher year on year. The increased investments in Energy Infrastructure Solutions reflect the planned expansion of the business, particularly in the United Kingdom, Northern Europe and Germany. E.ON acquired a stake in a large-scale battery energy storage project in the United Kingdom to create flexibility options for tomorrow's electricity grids. Investments in Energy Retail increased mainly due to the continued digitalization of energy retailing and the expansion of E-Mobility.
E.ON's increased investment in the first half of the year was accompanied by the hiring of more than 2,000 people, most of them in Energy Networks. In addition, E.ON is digitizing and improving its systems and all associated processes. For example, E.ON continued to make progress in expanding the number of digital transformer stations in Germany. These are a key element for the efficient operation of medium- and low-voltage grids. In the first half of 2024 alone, E.ON installed around 2,000 digital transformer stations.
The company's growth and investment program as well as continued digitization puts it in a favorable position for the coming years. E.ON plans to invest a total of €42 billion in the energy transition by 2028. The focus will be on its Energy Networks business, in which it plans to invest €34 billion.
Leonhard Birnbaum said: "Europe's energy transition is a project that urgently requires private investment on an unprecedented scale. This will require making it attractive to international investors. Without adequate rates of return, it will not be possible to finance the huge investments needed to expand network infrastructure. The return on network investments lags significantly behind countries with a similar investment risk, notably Germany. It is therefore urgent and necessary for regulators to act now. Network operators need a long-term framework that provides adequate rates of return on network investments. And this framework must come into force as soon as possible - for both new and existing assets. The same applies to investments in digitization of energy infrastructure, without which the energy transition and its many millions of decentralized systems and players cannot succeed. This also includes adequate compensation for the implementation of smart meters in Germany. At the same time, improvements in one area should not be offset by excessive demands elsewhere, such as inadequate productivity targets. All this is not just about the economics of the environment for distribution networks. It is the investments in our Energy Networks division that primarily enable the necessary decarbonization of the electricity, heating and transport sectors and thus the achievement of environmental goals. And they create jobs and promote economic strength and prosperity in Germany and Europe."
Germany's E.ON Group is one of the market leaders in the energy sector, with a consolidated presence in Romania over 19 years. The group's flagship companies are Delgaz Grid and E.ON Energie Romania, which are active in the distribution and supply of energy and energy solutions to around 3.5 million customers. Since entering the Romanian market, E.ON has invested more than €2.3 billion, mainly in network modernization. At the same time, contributions to the state and local budgets amount to €3.4 billion.