E.On UK earnings dragged down by energy price cap

Energy giant E.On’s UK earnings have dived after it was dragged down by the impact of the energy price cap.

The energy provider blamed “keen competition” and the increase in the level of the new default tariff price cap as UK earning slumped by 90 million euro (£77 million).

Its customer solutions business in the UK “remained under considerable pressure”, it said, after recording a 200 million euro (£173 million) decline in UK sales over the three months to March 2019.

E.On reported a “reduction in power and gas volumes” over the period in the UK.

The decline in volumes follows British Gas owner Centrica’s announcement on Monday that warm weather would affect its results for the first half of the year.

Centrica said it saw a “challenging” start to 2019 after it lost another 234,000 UK household customer accounts over the first four months of the year

British customers have been quick to change energy providers after Ofgem introduced higher price caps designed to protect those on poor value deals.

Earlier this year, E.On said that customers on its standard variable gas and electricity tariff would see bills increase by about £117 from £1,137 to £1,254 from April 1 as a result of the regulator changes.

Gains in Germany helped buoy the global business, which stuck to its profits guidance for the year following an overall increase in sales for the quarter.

Sales for the quarter rose by 4.5% year-on-year to 9.2 billion euro (£7.9 billion), as it also benefited from growth in its renewables segment.

Group adjusted earnings before interest and tax fell 8% to 1.67 billion euro (£1.44 billion), while its retail unit saw a 44% fall in profits.

Marc Spieker, E.On chief financial officer, said: “Aside from the special case of the United Kingdom, our core businesses delivered a solid performance.

“We can therefore unequivocally reaffirm our forecast for the 2019 financial year.”