Germany's E.ON suffered its biggest ever annual loss after booking billions of euros in charges on its ailing power plants. As Amy Pollock reports Germany's biggest utility is clearing the way for a spin off of assets hit by ultra-low wholesale prices.
Crunch time for European utilities. As EON posts its biggest ever annual loss, energy companies are facing challenging times. Weak demand, low wholesale prices and a boom in renewables have meant a 3.2 billion euro loss for Germany's biggest utility. That's down to booking 5.4 billion euros of charges on its ailing power plants in 2014. Johannes Teyssen is CEO. (SOUNDBITE) (German) E.ON CHIEF EXECUTIVE JOHANNES TEYSSEN SAYING: "This year will be as hard a year as 2014, if not harder. But we will achieve what we intend to achieve. We are in the middle of a big change, but we will not for a moment lose sight of the markets and our clients." IG's Chris Beauchamp says E.ON and its rivals are at a crossroads. (SOUNDBITE) (English) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "Either you focus on traditional oil and gas and coal or you shift to renewables and that's going to be the major issue for all these companies. EON's cautious outlook for the rest of the year signals that this is the make or break time for these really big companies." EON's strategy is radical. The energy giant is spinning off its conventional power generation business. Instead it will concentrate on renewables, power grids and services in the future. It's the logical step, says Beauchamp. SOUNDBITE) (English) IG MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "You look towards what is still arguably the future in power generation like solar, wind and also those more secure areas like power grids because regardless of what produced the power that keeps homes alight and keeps everyone warm, you still need those power grids and that's maybe the secure area of the business" EON's competitors are also having to deal with a dire outlook. The winners will be those who adopt the best transformation strategy in a world now focused on renewables.