E.ON: Gazprom deal propped up profits in first quarter

E.ON, Germany's biggest power supplier, on Wednesday booked a rise in profits in the first three months of this year after the group secured better gas prices from Russian supplier Gazprom. 

"Our first-quarter results were in line with expectations," E.ON said in a statement.

Net profit rose by 30 percent to 1.3 billion euros ($1.5 billion) and operating profit, as measured by earnings before interest, tax, depreciation and amortisation (EBITDA), increased by eight percent to 3.1 billion euros. 

"The earnings improvement is attributable to a non-recurring positive effect resulting from the agreement with Gazprom to adjust the terms of long-term gas supply contracts," the statement said. 

"Without this effect, E.ON's earnings would have been slightly below the figure from the first quarter of the prior year." 

Revenues were down 12 percent at 27.1 billion euros. 

E.ON, like other power suppliers, is being hit by falling wholesale electricity prices, particularly in its conventional power generation divisions of gas, coal and nuclear. 

It has shut down a number of its plants and been compelled to make heavy writedowns on its accounts as a result.

Germany's transition from conventional carbon fuels to greener, cleaner sources of energy means the country's power utilities are facing enormous pressure on their margins.

The cost of having to close down their nuclear power plants and the heavy subsidies afforded to renewable energy have pushed them deeply into the red, the companies argue.

The glut of government-subsidised solar, wind and other renewable power has led to a collapse in wholesale electricity prices. 

In order to tackle this, both E.ON and its rival RWE decided to split their conventional and renewable activities. 

E.ON is spinning off its conventional power generation activities into a separate unit, Uniper, a move which will be voted on by shareholders at the group's upcoming annual meeting on June 8.