Eon has reported a fall in profits from its UK retail arm after the supplier lost around 200,000 customers during 2018.
Its financial results for the year showed a 32 per cent drop in adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) to €237 million.
The slump came despite an 8 per cent rise in revenues to €7.76 billion as a result of higher power prices and increased gas sales driven by cold weather.
Adjusted earnings before interest and tax (EBIT) contracted by 43 per cent to €142 million owing to “persistently challenging market conditions, higher restructuring expenditures, regulatory effects and a weather-driven decline in power sales”.
Going by this measure, the supplier posted a €1 million loss in the last three months of the year compared to a €108 million profit during the same period in 2017. Adjusted EBITDA for the quarter was down almost four-fifths at €26 million. It ended 2018 with 6.8 million gas and electricity customers in the UK.
Eon as a whole saw a 2 per cent decrease in adjusted EBITDA to €4.84 billion. Adjusted EBIT was down by 3 per cent at €3 billion and net income by 16 per cent at €3.53 billion.
The company unveiled plans in March last year to buy RWE’s 76.8 per cent stake in Innogy in exchange for 16.67 per cent of the Eon group, its renewable portfolio and €1.5 billion in cash. RWE will also receive Innogy’s renewable assets if the deal goes ahead.
The Competition and Markets Authority launched an investigation into the transaction in February, as did the European Commission last week. Eon chief executive Johannes Teyssen said the commission is expected to give its approval in the second half of 2019.
Innogy owns the big six supplier Npower, which was due to be merged with the retail arm of SSE when the deal was announced.
However, the merger has since been cancelled, meaning the asset swap between RWE and Eon would leave the latter holding two of the big six – both its own namesake supplier and Npower. Based on the latest figures from Ofgem, they would have a combined market share of 22 per cent for electricity and 18 per cent for gas.
Eon said in January it did not anticipate the collapse of the merger between Npower and SSE having “any material effect” on the deal with RWE. Announcing its financial results for 2018 earlier today (13 March), Innogy said it is currently considering “alternative options” for the future of Npower.