Company Reports

E.On's first-half adjusted EBITDA increased by 1% year on year to EUR 5.4 billion. Adjusted net income increased by 5% to EUR 1.92 billion on lower minorities. The group confirmed its 2026 guidance, including net income in a EUR 2.7 billion-EUR 2.9 billion range.

E.ON's first-quarter EBITDA increased by 2% year on year to EUR 3.25 billion. Adjusted net income increased by 7% to EUR 1.34 billion on lower minorities. The group confirmed its 2026 guidance, including net income in a EUR 2.7 billion-EUR 2.9 billion range. Shares are up by 3.5% intraday May 13.

E.On has agreed to acquire UK retail energy supplier Ovo, adding 4 million customers. The transaction price has not been disclosed. Upon completion of the transaction, E.On's UK market share will increase from 16% to 28% in electricity and 13% to 23% in gas.

E.On transformed itself in 2016 by spinning off Uniper, its commodities and power generation business, and ultimately selling its stake in Uniper to Fortum in 2018 for EUR 3.7 billion. This deal refocused E.On on networks, retail, and renewables.

E.On released 2025 earnings slightly ahead of FactSet consensus. It plans to invest EUR 48 billion over 2026-30, 9% above the previous 2024-28 plan and underpinning a 6% EPS CAGR by 2030. The guidance of annual dividend growth up to 5% is extended through 2030.

The European utilities sector increased by nearly 8% since the end of September, outperforming the market by 5% due to stabilizing interest rates, solid third-quarter results, and hopes that artificial intelligence growth will boost electricity consumption in Europe.

E.On reported mixed third-quarter results, as 3% EBITDA growth to EUR 1.9 billion was offset by higher depreciation and net interest expenses, leading to a 19% year-over-year decline in net income. Management’s commentary on current regulatory developments likely weighed on investor sentiment.

European utilities shares decreased by 3% since the end of June, underperforming the market by about 6%.

E.On reported second-quarter adjusted EBITDA of EUR 2.3 billion, up 8% year over year, though higher depreciation and operating interests offset this at the net income level, which fell 7% to EUR 660 million. Management reaffirmed full-year guidance and adjusted its targets for 2028.

European utilities rose by 12% in the second quarter, outperforming the market by 10%.

E.On's first-quarter 2025 net income jumped by 22% to EUR 1.27 billion. 2025 guidance was confirmed.

On April 28 around midday, a sudden 60% drop of the power supply combined with a disruption in the connection with France caused a shutdown of the electricity grid in Spain and Portugal. The reason is still unknown. Power supply was fully restored on April 29.

E.On transformed itself in 2016 by spinning off Uniper, its commodities and power generation business, and ultimately selling its stake in Uniper to Fortum in January 2018 for EUR 3.7 billion. This deal refocused E.On on networks, retail, and renewables.

After rallying on April 3 together with government bonds, European utilities have been caught in the market rout since April 4.

European utilities increased by about 10% in the first quarter of 2025 thanks to good full-year results, attractive shareholder remuneration, and limited exposure to US tariffs. The latter was key in the material outperformance of the sector.

On March 4, the Christian Democratic Union, Christian Social Union, and Social Democratic Party agreed to present a bill to the German parliament between March 10 and March 14 to introduce a constitutional amendment to create a EUR 500 billion infrastructure fund, which aims to boost the German economy.

We confirm our EUR 17 fair value estimate after narrow-moat E.On released 2024 results in line with our expectations, set 2025 guidance a tad above FactSet consensus, but below ours and raised its 2028 net guidance, albeit below our expectations. The downside to our forecasts in 2025 and 2028 is driven by investments below our estimates so the hit to the valuation is limited. Besides, E.On could raise its investments should regulation improve for the German grid. We commend this approach. The 2024 dividend is set at EUR 0.55, 4% above 2023 and implying a 4.6% yield. The commitment to grow the dividend annually by up to 5% through 2028 was reiterated. The 2025 P/E of 10.7 reflects the material undervaluation of the shares.

Germany’s election outcome closely reflects the polling results and is in line with our expectations, with the CDU winning the vote and the SPD retaining sufficient seats to allow for a two-party coalition. While the higher share of seats won by the far-right AfD may limit the CDU’s ability to execute on its manifesto, the conclusion of the elections provides some certainty that is positive for no-moat RWE and narrow-moat E.On. Both are up by about 3% at time of writing on Feb. 24, outperforming the DAX that is up by 0.8%. We confirm our fair value estimates of EUR 48 for RWE and EUR 17 for E.On, offering a material upside for both.

With the Christian Democratic Union leading the polls ahead of Germany's Feb. 23 elections, the most probable outcome is the return of a coalition government with the Social Democratic Party, which is unlikely to result in a significant shift in German energy policy. The CDU proposes an assessment of reopening the nuclear plants that closed in 2023. We believe this is unlikely because of prohibitive costs and extended timelines. To address the shortage of baseload power capacity, we expect the government to postpone some coal plant closures and introduce the long-awaited capacity market to incentivize the construction of new combined-cycle gas turbines. While the CDU remains committed to Germany's 2045 climate neutrality target, the rapid pace of renewable energy expansion in recent years will likely slow down. This is mainly due to the upcoming parliamentary vote on a bill that would reverse recent approvals for numerous onshore wind projects. However, investment in electricity networks should remain high, as grid expansion is critical to reducing costly congestion.

We confirm our EUR 17 fair value estimate after narrow-moat E.On released nine-month results in line with FactSet consensus and confirmed its 2024 guidance. The 2024 P/E ratio of 10.3 reflects the material undervaluation of the shares despite an appealing dividend and earnings growth outlook underpinned by the group's favorable positioning against the acceleration in electricity grid investments across Europe.