EON writes off EUR 2.5 billion due to lower margins in Spain, Italy, France

Discussion in 'Stocks' started by ASusilovic, Oct 27, 2010.

  1. Today E.ON published an ad-hoc-release regarding impairments charges in Italy, Spain and France. Since E.ON conducted its last comprehensive valuations in late 2009, it believes the market environment in Italy, Spain, and France has deteriorated due to the negative impact of the financial and economic crisis.

    The development of electricity and commodity prices is in some cases leading to significantly lower margins and capacity utilisation. As a result, the expected contributions to EBIT by these markets have deteriorated in the medium to long-term. Consequently, E.ON sees the need to record an impairment charge of around € 1.1 billion on goodwill and around € 1.5 billion on other assets, mainly in connection with the activities in Italy, Spain and France acquired from Enel/Acciona and Endesa.

    The impairments reduce the Group’s net income. There is no impact on Adjusted EBIT and adjusted Group net income (assessment basis for dividend payments). The impairments are also not cash effective.