E.ON AG (EOAN.XE) Monday reported a near 13% increase in net debt in the first half of the year compared with the end of last year driven mainly by the company's investment program and dividend payments to shareholders.
E.ON AG (EOAN.XE) Monday reported a near 13% increase in net debt in the
first half of the year compared with the end of last year driven mainly by the
company's investment program and dividend payments to shareholders.
Germany's largest utility by market value added, however, that its debt will
materially decline in the remainder of 2012 as it expects to book disposal
proceeds as well as cash payments related to a recent agreement with its
largest gas supplier over long-term gas contracts that were previously
loss-making.
"Payments anticipated in the second half of the year will have a
significant positive impact on E.ON's net debt," the company said.
At the end of June, E.ON's economic net debt stood at 41.1 billion euros ($50.4
billion), up 12.9% from the EUR36.4 billion at the end of 2011.
Economic net debt includes the company's net financial position, certain
currency derivatives used for financing transactions with pension obligations,
and asset retirement obligations.
The comments come after credit rating firm Standard & Poor's late last
month downgraded E.ON's creditworthiness to A-minus from A-flat, citing
deteriorated trading conditions on European energy markets with depressed power
prices and excess supply.
Rival RWE AG (RWE.XE) was also downgraded by S&P--to triple B-plus from
A-minus.
In contrast to E.ON, however, S&P also expressed concern that RWE's debt
profile isn't improving quickly enough due in part to lack of progress with its
asset disposal program.
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