Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on E ON SE. We currently have 12 research reports from 1 professional analysts.
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E ON SE
E ON SE
Uniper depreciation and nuclear provisions put pressure on E.On’s capital levels
09 Nov 16
E.On has published its Q3 16 results with adjusted operating profit falling 4% yoy to €2.3bn and adjusted net income falling by 8.3% yoy to €641m. Net economic debt (including provisions) is up 10.8% yoy to €23.6bn. On a reported basis, revenue fell 12% yoy to €28.2bn and the consolidated net loss reached -€9.3bn, of which -€3.95bn for E.On’s shareholders and -€5.35bn for minority interests (mainly attributed to Uniper). The group confirmed its full-year guidance of adjusted EBIT at €2.7-3.1bn and net income of €6.1-1bn. The equity levels of E.On have reached €433m after depreciations and mark-to-market measures, down from €16.4bn a year ago.
Uniper spin-off achieved; valuation gap confirmed
13 Sep 16
The much awaited spin-off of Uniper from E.On has been finally completed with the listing of the company on the Frankfurt stock exchange. Conventional generation (including Swedish nuclear) and the commodity-driven unit (with trading and Russian E&P) have started trading at €10.01/share, which values the company at €3.66bn, although the stock rose 3% throughout the day and finished trading at €10.3/share, translating into a market cap of €3.77bn. E.On issued 365.95m new shares, as E.On shareholders received one Uniper share for 10 E.On shares. 53% of this share number was given to E.On’s shareholders, while the company kept 47%. “New E.on” and Uniper combined have a higher market value than the integrated company, which may be translated as a positive transaction achievement. Nevertheless, as E.On was part of the DAX index, Uniper was listed for a day on the same index (on 12 September), but will now be traded on the m-DAX index from 13 September onwards. This has put some pressure on the first day of trading as index-linked funds would sell these shares as the company exits the index.
Equity levels under pressure; additional writedown on Uniper likely
10 Aug 16
E.On has released its half year results which revealed a difficult half of the year with revenues falling 11% yoy to €20.254m, adjusted EBITDA -13.5% to €2,901m and adjusted operating profit decreasing to €2,001m (-6% yoy), which are in line with expectations. However, due to impairment charges on power stations, gas storage facilities and contingent charges of €3.8bn on Uniper, net income fell into negative territory once again with a reported loss of -€3,034m (compared to €1,149m a year ago). On an adjusted basis, nonetheless, net income reached €604m, providing a 28% yoy decrease and missing market expectations by 7%. On the core business (within the New E.On framework: networks, renewables and retail), adjusted operating profit increased by 15% yoy to just under €1.7bn, but missed market expectations by 11%; while for Uniper, adjusted operating profit contracted by 31.6% to €283m. Operating cash flows contracted by 12% yoy while economic net debt increased by 16.5% ytd to €24.8bn, mainly driven by an increase in pension provisions from a further decline in interest rates. Despite the negative results, the group has maintained its full-year guidance of an adjusted operating profit in the €2.7-3.1bn range and adjusted net income at €0.6-1bn. The Uniper spin-off continues on schedule with an expected stock listing in September.
Shareholders accept Uniper's spin-off, major changes to the board
09 Jun 16
E.On’s shareholders approved on 8 June 2016 the spin-off of a 53.35% majority stake in Uniper. The decision for the spin-off was supported by 99.68% of the share capital represented at the meeting (where 75% was needed for acceptance). The decision will take effect in the second half of 2016, when E.On’s shareholders will then automatically receive Uniper shares in a one-to-ten ratio: one Uniper share for every ten E.On shares they hold. Shareholders also approved the actions of the Management Board and Supervisory Board during the 2015 financial year as well as the dividend of €0.50 per share proposed by the Management and Supervisory Boards. In addition, shareholders have voted for Karl-Ludwig Kley to be the new Chairman of the E.On SE Board. He will succeed Werner Wenning, who has decided to step down at his own request. Wenning had been a member of E.On’s Board since April 2008 and its Chairman since May 2011. The Annual Shareholders Meeting also elected four other members to E.On’s Supervisory Board and resolved to increase the number of members from 12 to 18 until 2018: Erich Clementi, Senior Vice President for Sales and Distribution at IBM, Carolina Dybeck Happe is CFO of ASSA ABLOY AB, a publicly-listed company in Sweden which manufactures lock and security systems, Andreas Schmitz, an attorney and bank manager Ewald Woeste who has comprehensive knowledge of the energy industry. Three new employee representatives will also join the enlarged Board structure. A total of five female members will on the Board. Moreover changes in the remuneration of Management and Board members have been accepted, whereby the Management Board will be obliged to invest significantly in E.On stock and hold the corresponding number of shares. The annual remuneration will be based on EPS, as this will be the figure used to determine the dividend in the coming years. Moreover, remuneration for a period of several years will depend on the relative movement of E.On stock in comparison to its main European competitors, as measures would be taken based on the relative total shareholder return. The new remuneration system will become effective from 2017 onwards.
Results boosted by one-offs, margin contraction accelerates. Capital measures may be needed
11 May 16
E.ON’s results were positively impacted by the Gazprom one-off from the renegotiation contract that boosted earnings for the group. However, revenues decreased 12% yoy to €27.13bn, where the greatest decreases were felt on the generation side (-41% yoy) and the E&P division (-68%). On EBITDA, the renegotiation contract alone provided €400m, pushing up the trading division’s earnings and the consolidated values of the group towards 8% yoy to €3.07bn. Nevertheless, when adjusted for the one-off, EBITDA was down 6.1% yoy to €2.67bn, mainly driven by the 29% decrease in generation earnings, -82% in E&P and -10% in renewables. Reported net income reached €1.17bn, a 10.5% yoy increase, while underlying net income (company value) reached €1.31bn, a 30% yoy increase, but the effect is mainly due to the €300m one-off from the contract. Without this one-off effect, earnings would have been below the previous year’s level. The net economic debt of the company decreased by €1.1bn ytd, mainly due to an increase in liquid funds and lower financial debt, which compensates for the increase of €1.5bn in pension provisions (+36.3%). Due to this, the group maintains its FY guidance for EBITDA between €6.4bn and €6.9bn and net income between €1.5bn and €1.9bn.
Capital markets day: spin-off information and guidance
27 Apr 16
A first look into the spin-off decision has been provided by the company, in which E.On will list 53.35% of Uniper later this year, to fully deconsolidate the assets. No date or IPO price has yet been set for the operation although the listing is expected in H2 16. Nevertheless, E.On expects to fully dispose of the remaining stake of the company by 2018. Each E.On shareholder will receive Uniper shares with a 10:1 allotment ratio. The company is expected to be listed on the N-DAX. In terms of guidance, EBITDA should be between €4.6bn and €5bn, operating profit €2.7-3.1bn, with underlying net income expected to be €0.6-1.0bn. This would translate into an EPS between €0.3 and €0.5, with a payout ratio of 40-60%, which implies a dividend payment of €0.12 to €0.15/share. Moreover it targets a BBB+/Baa1 rating, a ROCE between 8% and 10% and an EPS CAGR of 5-10%. Uniper is committed to pay €200m for the 2016 dividend, translating into a €0.55/share (at 365.96m shares). The dividend for 2017 forward will be aligned to free cash flows, which implies that it will be volatile. For E.On, the dividend received from Uniper will contribute to the free cash flow. The combined dividend between E.On and Uniper implies a dividend payment of about €0.30/share, which translates into a 40% decrease from 2015 levels and is still 25% below consensus expectations. For E.On, capex will be around €10bn up until 2018 with €3.6bn expected for 2016. Given the high capex needs, net debt is expected to increase in the coming years and pressure will be felt on the rating side (in addition to mounting pressure on the provisions level for nuclear assets). Moreover, both companies (E.On and Uniper) have presented their management teams, board members and the management incentive schemes (based now on E.On vs Stoxx 600 utility performance and EPS growth).
Emerging from the clouds
16 Feb 17
Rolls-Royce’s underlying performance in FY16 was ahead of both its own and market expectations. Media focus on the non-cash £4.4bn headline FX loss is missing what looks to be the basis for optimism. As the civil model starts to move from investment in engines for the A350 and A330neo into the aftermarket delivery phase over the remainder of the decade, we think cash flow is likely to improve, particularly if supported by an eventual recovery in Marine.
15 Feb 17
At the current market capitalisation of £29m, we believe the shares are significantly undervalued. We estimate that the highly profitable Maritime business is alone worth at least £40m. With net cash of £9m at end-2016, this implies that the market is currently ascribing a combined negative value of £17m to the rest of the group, which together account for c.54% of group revenues. This is very harsh given the management actions to transform TP Group to a profit-driven Tier 2 specialist services and engineering company are bearing fruits across the divisions. TPG Managed Solutions is expected to more than double its profits in 2017, while TPG Engineering and Design & Technology are on course to deliver sustainable profits from 2019. Even if we ascribe zero value to Engineering, Design & Technology and Managed Solutions, the shares are worth 9.5p a share, a 38% upside from the current share price. BUY.
Taking the bull by the horns
15 Feb 17
Avon Rubber announced this morning that CEO Rob Rennie has left and been replaced with Paul McDonald, formerly managing director of Avon’s Dairy division. This news comes as a surprise and is likely to raise some questions over the CEO and CFO transition, with the CEO only being in post for just over a year. However, the group has appointed an executive already known to many who have followed the business, and as such should be seen as a good appointment with a track record of decisiveness and getting things done.
The Slide Rule
12 Jan 17
What is The Slide Rule? The Slide Rule has been designed to dramatically simplify the identification of the best companies in the UK small/mid-cap sector by making a quantitative assessment of the relative potential of each company. At its core, The Slide Rule aims to identify those companies that create genuine shareholder value through strong returns on capital and solid growth, but also present a value opportunity with the potential tailwind of earnings momentum. Companies are assessed within a Quality, Value, Growth and Momentum (QVGM) framework.
Share & share alike
14 Feb 17
The rally in the last fortnight, highlighted in the table, reflects a continued flow of positive updates and economic news. The FTSE 250, Small cap and Fledgling indices have reached record highs. We are in the lull ahead of results for those companies with a December year end, a welter of economic data regarding the UK economy, the State of the Union address in the US on 28 February and the UK Budget on Wednesday 8 March. We will learn at that stage the latest forecasts from the Office of Budget Responsibility. As highlighted previously, the reaction to corporate updates will continue to set the tone.