European Utilities Key Player Profiles: E.On

Table of Contents

• CATALYST
• SUMMARY
• METHODOLOGY
• ANALYSIS
  • European Utilities Key Player Profile: E.ON
  • Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
    • Key Players dominate power generation capacity market share in the Wmed competitive arena
    • Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
    • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
    • Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
  • The Key Player Scorecard assesses utilities across four pillars: Performance, Scale, Growth and Exposure
    • The Performance pillar combines 5 financial metrics to measure business performance
    • The Scale pillar combines financial and operational metrics to measure the size of a utility
    • The Growth pillar measures the rate of growth of a utility' s financial and energy resources
    • The Exposure pillar combines both operational and financial measurements of risk
  • E.ON scores 43.5/100 on Datamonitor' s European Utility Scorecard and ranks 5 out of the 31 Key Players covered
    • E.ON' s ranking varies widely across the four pillars
    • E.ON achieves an overall ranking of 5, with a utility score of 43.5
    • E.ON' s high overall ranking is driven by a significantly higher than average Scale score
    • Most top ten utilities perform better than E.ON, but with similar or lower levels of risk (a similar or higher Exposure score)
    • On the Scale measure E.ON surpasses its peers, but is only slightly above average in terms of Growth
  • E.ON scores well on return on sales, but lags on other metrics, with a Performance ranking of 17 overall
    • E.ON' s financial performance is in line with the Key Player average, with a score of 10.3
    • E.ON has an average operating profit margin and return on fixed assets, and has only slightly above average return on sales
    • E.ON lags the top ten utilities in return on investment and return on energy volume
  • E.ON ranks highly in the Scale pillar, on all measures
    • On Scale factors E.ON surpasses almost all other Key Players
    • In terms of generation capacity E.ON ranks 3 with 49.8 GW
    • E.ON' s gas supply volume is more than twice its power supply volume
    • E.ON has a 13% share of Key Player power customers
    • At 404.1 TWh, E.ON ranks 2 in terms of power volume
    • E.ON has a 6.2% share of Key Player gas customers
    • E.ON ranks 2 in terms of gas volume
    • E.ON ranks 2 in terms of revenue and 3 in terms of net income
  • E.ON' s Growth ranking of 8 is driven by above average profit growth
    • E.ON' s growth metrics are average except for power supply volume growth, where it lags the average
    • E.ON' s price earnings ratio and operating profit margin lag behind most other Key Players
    • From 2001 to 2005, E.ON' s annual profit growth (29.3%) far exceeded its revenue growth (8.6%)
    • E.ON' s growth in operating cash flow (11.9%) has exceeded gas (6.5%) and power (3%) volume growth from 2004 to 2005
  • E.ON has an average level of risk, illustrated by its overall Exposure ranking of 16
    • E.ON' s Exposure measures are roughly in line with the Key Player averages
    • At -95.1%, E.ON' s gas NTR as a proportion of its gas supply obligations is ranked 9 overall
    • E.ON' s power volume exceeds its generation output by 34.3%, leading to a negative net trade requirement of 139.1 TWh
    • At 1.3, E.ON' s debt to equity ratio is higher than most of its top ten Key Player peers
    • Despite having the second highest level of equity, E.ON ranks 21 in terms of debt leverage amongst the Key Players
    • E.ON' s growth in operating cash flow has not fully kept up with the utility' s growth in energy volume
  • E.ON has a diverse geographic spread of operations
    • Nuclear and coal plants represent over half of E.ON' s power generation capacity
    • E.ON has significant power sales in 3 European competitive arenas and the US
    • E.ON sells gas in 3 competitive arenas and the US
    • E.ON owns significant power capacity in four countries
    • E.ON ranks third amongst Key Players in terms of the number of power customers
    • E.ON ranks fifth amongst Key Players in terms of the number of gas customers
• APPENDIX
  • Databook
  • Definitions
  • List of Tables
    • Table 1: The Key Players are drawn from across a diverse range of markets
    • Table 2: The Performance pillar combines 5 financial metrics to measure business performance
    • Table 3: The Scale pillar combines financial and operational metrics to measure the size of a utility
    • Table 4: The Growth pillar measures the rate of growth of a utility' s financial and energy resources
    • Table 5: The Exposure pillar combines both operational and financial measurements of risk
    • Table 6: E.ON scores 43.5/100 on Datamonitor' s European Utility Scorecard and ranks 5 out of the 31 Key Players covered
    • Table 7: E.ON scores 10.3/25 on the Performance pillar, and ranks 17 out of 31 on this measurement
    • Table 8: E.ON scores 14.6/25 on the Scale pillar, and ranks 2 out of 31 on this measurement
    • Table 9: E.ON scores 9.7/25 on the Growth pillar, and ranks 8 out of 31 on this measurement
    • Table 10: E.ON scores 8.8/25 on the Exposure pillar, and ranks 16 out of 31 on this measurement
    • Table 11: E.ON scores well on return on sales, but lags on other metrics, with a Performance ranking of 17 overall
    • Table 12: E.ON ranks highly in the Scale pillar, on all measures
    • Table 13: E.ON' s Growth ranking of 8 is driven by above average profit growth
    • Table 14: E.ON has an average level of risk, illustrated by its overall Exposure ranking of 16
    • Table 15: Return on fixed assets
    • Table 16: Return on sales
    • Table 17: Operating profit margin
    • Table 18: Return on energy volume
    • Table 19: Return on investment
    • Table 20: Generation Capacity / EU25 market total
    • Table 21: Power Supply Volume / EU25 market total
    • Table 22: Gas Supply Volume / EU25 market total
    • Table 23: Net income / Net income of 94 leading utilities
    • Table 24: Revenue / Revenue of 94 leading utilities
    • Table 25: Revenue growth, 2001-2005 CAGR
    • Table 26: Profit growth, 2001-2005 CAGR
    • Table 27: Growth in operating cash flow, 2004 to 2005
    • Table 28: Gas supply volume growth, 2004-2005
    • Table 29: Growth in power supply volume, 2004 to 2005
    • Table 30: Power NTR / Power supply volume
    • Table 31: Gas NTR / Gas supply volume
    • Table 32: Debt leverage
    • Table 33: Growth in operational cash flow - Growth in energy volume
  • List of Figures
    • Figure 1: Datamonitor' s Key Player Scorecard examines 31 leading utilities drawn from across Europe' s competitive arenas
    • Figure 2: Key Players dominate power generation capacity market share in the Wmed competitive arena
    • Figure 3: Key Players dominate power generation output market share in the Wmed and CEE competitive arenas
    • Figure 4: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate power supply volume market share
    • Figure 5: Despite ongoing industry consolidation, in no competitive arenas do Key Players dominate gas volume market share
    • Figure 6: E.ON achieves an overall ranking of 5, with a utility score of 43.5
    • Figure 7: E.ON' s high overall ranking is driven by a significantly higher than average Scale score
    • Figure 8: Most top ten utilities perform better than E.ON, but with similar or lower levels of risk (a similar or higher Exposure score)
    • Figure 9: On the Scale measure E.ON surpasses its peers, but is only slightly above average in terms of Growth
    • Figure 10: E.ON' s financial performance is in line with the Key Player average, with a score of 10.3
    • Figure 11: E.ON has an average operating profit margin and return on fixed assets, and has only slightly above average return on sales
    • Figure 12: E.ON lags the top ten utilities in return on investment and return on energy volume
    • Figure 13: On Scale factors E.ON surpasses almost all other Key Players
    • Figure 14: In terms of generation capacity E.ON ranks 3 with 49.8 GW
    • Figure 15: E.ON' s gas supply volume is more than twice its power supply volume
    • Figure 16: E.ON has a 13% share of Key Player power customers
    • Figure 17: At 404.1 TWh, E.ON ranks 2 in terms of power volume
    • Figure 18: E.ON has a 6.2% share of Key Player gas customers
    • Figure 19: E.ON ranks 2 in terms of gas volume
    • Figure 20: E.ON ranks 2 in terms of revenue and 3 in terms of net income
    • Figure 21: E.ON' s growth metrics are average except for power supply volume growth, where it lags the average
    • Figure 22: E.ON' s price earnings ratio and operating profit margin lag behind most other Key Players
    • Figure 23: From 2001 to 2005, E.ON' s annual profit growth (29.3%) far exceeded its revenue growth (8.6%)
    • Figure 24: E.ON' s growth in operating cash flow (11.9%) has exceeded gas (6.5%) and power (3%) volume growth from 2004 to 2005
    • Figure 25: E.ON' s Exposure measures are roughly in line with the Key Player averages
    • Figure 26: At -95.1%, E.ON' s gas NTR as a proportion of its gas supply obligations is ranked 9 overall
    • Figure 27: E.ON' s power volume exceeds its generation output by 34.3%, leading to a negative net trade requirement of 139.1 TWh
    • Figure 28: At 1.3, E.ON' s debt to equity ratio is higher than most of its top ten Key Player peers
    • Figure 29: Despite having the second highest level of equity, E.ON ranks 21 in terms of debt leverage amongst the Key Players
    • Figure 30: E.ON' s growth in operating cash flow has not fully kept up with the utility' s growth in energy volume
    • Figure 31: Nuclear and coal plants represent over half of E.ON' s power generation capacity
    • Figure 32: E.ON has significant power sales in 3 European competitive arenas and the US
    • Figure 33: E.ON sells gas in 3 competitive arenas and the US
    • Figure 34: E.ON owns significant power capacity in four countries
    • Figure 35: E.ON ranks third amongst Key Players in terms of the number of power customers
    • Figure 36: E.ON ranks fifth amongst Key Players in terms of the number of gas customers