E.ON, formerly one of the largest integrated utilities in Europe, transformed the shape of its business in 2016 and again in 2018 with a major transaction and asset swap with German utility RWE. As a result, E.ON is now mostly a regulated network business focused on Germany, Sweden and eastern Europe, with a large downstream customer business (c50m accounts) across multiple geographies.
With a strong focus on regulated businesses, E.ON offers a relatively stable and defensive business model. Thanks to cost savings, synergies, and investments, earnings and dividend growth should be attractive in the coming years.
The CEO described 2021 as “great delivery despite the extraordinary challenges” and said EON was “dedicating ourselves full steam to the long-term target”. The CFO said EON is very comfortable with 2022 guidance despite challenges because 1) network negatives are timing effects only; 2) “confident on Customer Solutions” due to existing risk management approach; 3) some further upside in non-core businesses from power prices. The impact from exiting Nordstream 1 asset, which is worth circa €1bn, is pension fund related.