Like other European generators, EON has long suffered from low wholesale electricity prices and competition from subsidised renewables

Frankfurt am Main (AFP) - German energy giant EON on Wednesday said it was confident of meeting its 2018 goals after winning new customers in the second quarter despite “fierce competition”.

The Essen-based group said net profit stood at 1.8 billion euros ($2.1 billion) between April and June, down from 3.2 billion a year earlier when the group unexpectedly benefited from a massive nuclear fuel tax rebate.

Group revenues fell from 9.0 billion euros to 7.7 billion year-on-year, which it blamed on new accounting rules and a “significant decline” in sales in some European countries and Turkey.

EON, which suffered heavy losses in 2015 and 2016 amid a changing energy landscape, was nevertheless optimistic about its overall performance, noting that the group had added some 100,000 household customers over the first six months of the year.

Looking at adjusted net income in the first half, the group’s preferred yardstick which strips out non-operating items, EON reported a 19-percent rise in profits to 1.1 billion euros.

“Our core business – energy networks, customer solutions, and renewables – delivered good results, even though we continue to face fierce competition,” EON finance chief Marc Spieker said in a statement.

“We’re meeting these challenges with new products, new solutions,” he added.

Looking ahead, EON said it continued to forecast adjusted net profits of 1.3-1.5 billion for 2018.

Like other European generators, EON has long suffered from low wholesale electricity prices and competition from subsidised renewables.

It has also felt the pinch from the German government’s decision to turn away from nuclear power following the 2011 Fukushima disaster.

To address these challenges, EON announced plans in March to take over German rival RWE’s renewables unit Innogy as part of a complex asset swap deal set to shake up the energy sector.

The second stage of the deal would see EON transfer all of its renewables business to RWE – including Innogy’s activities.

The goal is for EON to focus on retail customers and on managing energy networks, essentially buying and selling electricity, while RWE will specialise in generating power from fossil fuels and renewables.

EON said 9.4 percent of Innogy shareholders had agreed to sell their stake to the group in the second quarter, meaning EON now owns 86.2 percent of Innogy.

In return, RWE will eventually gain an effective participation of 16.67 percent in EON – turning the one-time competitor into EON’s largest shareholder.

Executives hope for approval from regulators and competition authorities by mid-2019.

EON has said it expects the Innogy takeover to lead to some 5,000 job cuts.