E.on UK retail earnings plummet as price cap takes its toll

Energy giant E.on has blamed the energy price cap for sending UK retail earnings crashing 78%, as it also lost more customers.

The German-owned Big Six provider revealed underlying earnings at its UK household supply arm plunged to 12 million euros (£11 million) in the three months to June 30.

It said it saw a fall in customer numbers in the first half, having earlier reported a drop of around 200,000 in the three months to March, from 6.6 million at the end of 2018.

The second quarter performance left overall first half underlying UK retail earnings 65% lower at 71 million euro (£65 million) in the first half of 2019, and E.on warned the price cap will leave annual earnings in the wider division “significantly below” the previous year.

E.on said the market was “particularly challenging” in the UK after the introduction of the price cap for default and standard variable tariffs in January.

The firm’s figures come as the UK energy regulator Ofgem also announced on Wednesday that the price cap will reduce by £75 to £1,179 a year from October 1 due to lower prices in wholesale energy markets.

E.on’s wider group also saw figures impacted by the energy price cap and retail arm woes, contributing to a 12% fall in total half-year underlying earnings to 1.72 billion euro (£1.58 billion).

Across the group, earnings at its customer solutions retail division nearly halved to 240 million euro (£221 million) in the six months to June 30 from 477 million euro (£439 million) a year earlier.

Marc Spieker, chief financial officer at E.on, said: “The market in Great Britain is currently particularly challenging.

“But here we have already responded to the demanding environment with attractive new products and clear cost management.”

The firm also revealed an 11% fall in staff at its retail business to 17,608 amid restructuring efforts in the UK and elsewhere across Europe, while it has also been re-assigning staff to its energy network division.

E.on added it expects to complete its 40 billion euro (£36.8 billion) takeover of RWE’s Innogy – owner of npower – next month as part of an asset swap with RWE.

It is looking at strategic options for UK supplier npower, which has been loss-making for the past few years.