Eon has blamed the introduction of the price cap on default tariffs at the beginning of 2019 for a sharp fall in earnings in the first half of the year.
The results were released as Ofgem announced the cap will be reduced by £75 to £1,179 from 1 October due to a fall in wholesale energy costs.
Sales from Eon’s retail arm in the UK were down only slightly (2 per cent) when compared to the same period in 2018 at €3.9 billion.
However, adjusted earnings before interest and tax (EBIT) were “significantly lower”, plunging more than two thirds (65 per cent) to €71 million. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) dropped by almost a half (46 per cent) to €132 million.
A decline customers numbers also contributed to the decrease.
“The market in Great Britain is currently particularly challenging,” said Eon chief financial officer Marc Spieker.
“But here we have already responded to the demanding environment with attractive new products and clear cost management.”
Meanwhile, the commissioning of the Rampion offshore wind farm near Brighton helped drive a 17 per cent increase in adjusted EBIT from Eon’s renewables division to €275 million, although this impact was diminished somewhat by a reduction in energy prices in the UK.
The business is due to be transferred to RWE’s hands as part of the wider asset swap announced in March 2018.
Eon said the deal, which will also see the company take control of RWE’s subsidiary Innogy, is “right on schedule”. It said the preparations are “moving forward as planned” and that is confident the transaction be completed in September this year.
The European Commission approved RWE’s acquisition of the renewable portfolios of both Eon and Innogy in February and is currently conducting an in-depth investigation into Eon’s takeover of Innogy. The asset swap was given the green light by the Competition and Markets Authority in April.
Eon reported a fall in earnings across the whole of the group during the first six months of 2019, partly because of the poor performance of the UK retail division.
Adjusted EBIT dropped by 12 per cent to €1.7 billion and adjusted EBITDA by 3 per cent to €2.7 billion. Net income plummeted four fifths (81 per cent) to €544 million.
However, sales were up 5 per cent at €16.1 billion.