Dividend pearl E.on: That was strong

E.on shares are rising sharply in early trading. The energy supplier made a splendid profit in 2024 thanks to investments worth billions. The DAX group exceeded market expectations with its operating profit and the forecast for 2025 is also better than expected. The network expansion required for the energy transition is also expected to bring profits in the coming years.

However, due to pending regulatory requirements, CEO Leonard Birnbaum left the investments planned beyond 2028 open. Last year, E.on's earnings before interest, taxes, depreciation and amortization (adjusted EBITDA), adjusted for special items and non-operating earnings components, amounted to just over 9.0 billion euros. Although this is three percent less than in the previous year, analysts had expected an even greater decline. The bottom line is that shareholders received a good 4.5 billion euros, significantly more than in 2023, but this is also due to non-operating earnings effects, for example from derivatives. The dividend is expected to rise by 2 cents to 0.55 euros per share.

The experts surveyed by the company had also not previously expected that E.on would return to the 2023 operating profit level in 2025. Management expects an adjusted operating profit of 9.6 to 9.8 billion euros this year, which would exceed the 2023 level even in the worst case scenario.

In addition, the high level of investment is playing into E.on's hands, particularly in the expansion of the network infrastructure. On Wednesday, the company increased its investment plans as well as its medium-term profit expectations. From 2024 to 2028, the company now plans to invest 43 billion euros. That is one billion more than previously planned, which will flow into the expansion of the network infrastructure.

Day-to-day business should also improve as a result: Management now expects adjusted operating earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) to be over 11.3 billion euros in 2028 instead of over 11.0 billion euros previously. Analysts had expected 11.1 billion euros.

The Essen-based company's profitability is largely tied to the interest rate set by the Federal Network Agency. What this will look like for the electricity business from 2029 onwards is "not yet foreseeable," the group explained. CEO Birnbaum therefore did not extend the investment plans by a year as usual. E.on is prepared to continue investing, the manager said in a statement, "but never at any price."

E.on is Germany's largest electricity supplier and network operator. It has around twelve million electricity and two million natural gas customers in its home market. Almost a third of the electricity distribution network belongs to the group. E.on is also one of the largest charging station operators. According to the company, up to 78 percent of its operating result depends on the regulator.

Contains material from dpa-AFX