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Nuclear shutdown powers down E.ON's outlook

Nuclear shutdown powers down E.ON's outlook
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Energy company E.ON is the latest to post weak half-year results after the German government decided to dump nuclear power.

Like its rivals, the world’s largest utility in terms of sales has slashed its profit outlook and its dividend

It will cut up to 11,000 jobs in the medium term — 14 percent of its total workforce — as it becomes the latest casualty of Germany’s plan to shut all nuclear plants by 2022.

“We are not immune to negative changes in our markets,” E.ON Chief Executive Johannes Teyssen said.

E.ON — which also cut its dividend to 1.00 euro for 2011, down from 1.30 euros — added the job cuts would primarily affect administrative functions.

The company’s Chief Financial Officer Marcus Schenck also said during a conference call that the company’s profits would not recover in the near term.

“Based on our current financial planning, we expect results in 2012-2014 to be on a much lower level than 2010,” he said.

On Tuesday, peer RWE reported a 40 percent drop in first-half core profit, which it also blamed on the nuclear phase-out that had previously hit smaller energy firms EnBW and Vattenfall.

Analysts are also concerned about E.ON’s heavy net debt — currently at 33.6 billion euros — which it piled up as a result of major acquisitions in recent years, while rating agency S&P has put the company’s credit outlook on negative following the German government’s nuclear exit.