E.ON SE

Management Reports • Nov 10, 2010

News Details

Corporate | 10 November 2010 09:30

E.ON AG: ‘Cleaner & Better Energy’: E.ON defines new strategic focus

E.ON AG / Key word(s): Strategic Company Decision

10.11.2010 09:30

'Cleaner & Better Energy': E.ON defines new strategic focus

*Focus on competitive markets in Europe and growth outside Europe

*Business outside Europe to deliver 25 percent of total earnings by 2015

*EUR15 billion in divestments by year-end 2013

*Further EUR600 million through efficiency enhancements and performance
culture by 2013

*Less capital, more value

*Dividend of EUR1.50 per share anticipated for 2010 financial year, at
least EUR1.30 for 2011 and 2012

E.ON will focus in the future on competitive businesses in Europe and
enhance its efforts to leverage synergies across its businesses and
business areas in Europe's converging energy markets. E.ON is
systematically implementing its new-build projects in Russia and will
further expand its renewables capacity in North America. In addition, E.ON
intends to leverage its expertise in power generation and renewables in two
other regions outside Europe and to expand its trading business on a global
scale. By achieving a broader international footprint, E.ON plans for its
businesses outside Europe to deliver one quarter of its total earnings by
2015. Going forward, E.ON will put even greater emphasis on the
profitability of its existing and new businesses. E.ON aims to further
enhance its performance through a new, simplified organizational setup and
renewed efforts to enhance efficiency.

This new strategic focus will enable E.ON to achieve less capital-intensive
growth and to address the business challenges it expects in the years
ahead, resulting from public-policy decisions and an altered market
environment.

The E.ON Supervisory Board thoroughly discussed the new strategic course on
several occasions and fully supports it. Supervisory Board Chairman Ulrich
Hartmann said: 'Corporate strategy must be swiftly and resolutely adjusted
to fit with the altered business environment. The strategic plan presented
by the E.ON Board of Management is exactly the right answer to this
challenge. It gives our company a clear, ambitious profile.'

E.ON will accelerate its climate-protection efforts: it now plans to halve
the specific carbon emissions of its power generation in Europe by 2020
from a 1990 baseline, ten years earlier than previously planned. 'We have
the climate-policy objectives of the European Union and the German federal
government firmly in view. By systematically decarbonizing our power
generation and by offering customers energy-efficient products and
services, E.ON will make a very substantial contribution to bringing about
the transition to a climate-friendly energy supply and to reducing carbon
emissions. Our motto at home and abroad is: Cleaner & Better Energy,' E.ON
CEO Johannes Teyssen explained.

'E.ON will become more focused and at the same time more international. In
Europe, we're going to concentrate on what we can do best and on areas
where we see the biggest opportunities for profitable growth. Outside
Europe, we're going to achieve additional business growth by deploying our
expertise in areas where we're a true outperformer. This approach will
enable us to become an international energy specialist,' Teyssen said.

Focused positions in Europe

Europe is and will remain the main focus of E.ON's operations. Going
forward, E.ON will focus more on competitive businesses in which it has
advantages of scale and that can optimized together. It will concentrate
primarily on converging energy markets in order to optimally leverage
synergies across businesses and national boundaries.

E.ON will work systematically to further reduce the carbon intensity of its
power generation in Europe. The main focus will be on substantially
expanding its renewables capacity by deploying advanced, cost-effective
technologies on an industrial scale, such as large onshore or offshore wind
farms. E.ON will also make selective investments in flexible, low-carbon
conventional generating units as well as pumped-storage and run-of-river
hydroelectric plants.

E.ON's international gas business, which is managed by E.ON Ruhrgas, will
remain an important part of E.ON's portfolio going forward. The primary
objective is to adjust long-term supply contracts to reflect the new market
realities. E.ON has already entered into discussions with producers to
address this issue. E.ON also intends to do more to seize opportunities
through integrated optimization on a European scale.

E.ON intends to expand and further optimize its international trading
business managed by E.ON Energy Trading. This will enable it seize
opportunities created by the ongoing globalization of commodity markets.

In its energy sales business in Europe, E.ON will aim to achieve greater
differentiation from its competitors by offering intelligent products for
residential customers (such as micro CHP units for single-family homes) and
efficient energy solutions for business customers. In this way, E.ON's
sales business will also be geared towards greater energy efficiency and
sustainability.

E.ON will study how best, depending on the respective regulatory
environment, to further develop its regulated power and gas networks. At
its distribution networks in Germany, E.ON intends to continue its
tradition of close partnerships with municipalities and, where possible, to
expand these arrangements.

Targeted growth outside Europe

Outside Europe, E.ON will aim to tap the global growth in energy demand.
Europe's main priority is to make its energy supply more efficient and
climate friendlier. But other parts of the world still have a lot of
catching up to do in terms of expanding their generation capacity,' Teyssen
said. 'E.ON is a leading expert in building conventional and renewable
generating facilities. Going forward, we intend to leverage our experience
and expertise not only in Russia and North America but also in two other
regions. In this effort, we'll focus exclusively on offering solutions that
significantly improve the energy supplies in these regions,' Teyssen
emphasized.

E.ON has already laid the foundation for new businesses outside Europe by
forming a new business unit and management team under the leadership of
Frank Mastiaux, who until now has been CEO of E.ON Climate & Renewables.
Mastiaux has many years of international management experience, including
in regions like Asia, South America, and the Middle East.

Quicker and more efficient under new organizational setup

E.ON will execute its new strategy supported by a new, leaner
organizational setup. Group Management in Düsseldorf will oversee and
coordinate operations, which will be segmented into global, functional
units and regional country units. Five global units will be responsible for
managing power generation, new build and technology, renewables, energy
trading, and the global gas business. Twelve regional units will manage
E.ON's national sales operations, regional networks, and distributed
generation. E.ON's Russia business will also be managed as a regional unit.
Group-wide entities will deliver support functions like IT and procurement.
'Our new setup will make us leaner, quicker, and more efficient,' Teyssen
said.

E.ON will no longer make efficiency enhancement the focus of special
programs or projects but instead seek to firmly embed it in the company's
performance culture. The E.ON Board of Management aims for the company to
deliver an additional EUR600 million in annual earnings improvements by
2013. If such measures should require the approval of employee
representatives, approval can only be obtained after the measures have been
planned in detail. The Board of Management supports the company's proven
policy of working closely and constructively with employee representatives
to address such issues. E.ON is well on the way to achieving most of the
EUR1.5 billion in annual earnings improvements under the PerformtoWin
program it launched in 2007.

Divestments and portfolio optimization will reduce debt and increase scope
for investments

Despite the efficiency enhancements E.ON has already achieved and those
additionally planned, the company will face considerable business
challenges in the years ahead. In particular, Germany's decision to
institute a nuclear-fuel tax, the full auctioning of EU carbon allowances,
the altered market environment in the gas business, and narrower wholesale
margins will put considerable pressure on E.ON's earnings. Despite these
challenges, from today's perspective E.ON expects that its adjusted EBITDA
in 2013 will again be at roughly the 2010 level, without factoring in
portfolio measures.

E.ON intends to generate about EUR15 billion through further portfolio
measures by the end of 2013 to further reduce its debt and increase its
scope for investments.

E.ON's existing dividend policy, which calls for a payout ratio of 50 to 60
percent of adjusted net income, will remain unchanged. Nevertheless, E.ON
anticipates paying out a minimum dividend of EUR1.30 per share for the 2011
and 2012 financial years. It will aim for a dividend of EUR1.50 per share
for the 2010 financial year, unchanged from the prior-year dividend.

'Our business will face considerable business challenges in the years ahead
as we transform our company into a top-performing provider of outstanding
energy solutions. These challenges will require extraordinary efforts from
our managers and employees. But with our new strategy, a markedly leaner
organization, and a new performance culture, we'll work hard to add new
chapters to E.ON's success story, even in this difficult environment. The
focus of the next two years will mainly be on financial consolidation,
although we also want to begin achieving our planned growth outside Europe.
E.ON's strategy for cleaner and better energy will win over employees,
customers, and investors,' Teyssen said.

---

This press release may contain forward-looking statements based on current
assumptions and forecasts made by E.ON Group management and other
information currently available to E.ON. Various known and unknown risks,
uncertainties and other factors could lead to material differences between
the actual future results, financial situation, development or performance
of the company and the estimates given here. E.ON AG does not intend, and
does not assume any liability whatsoever, to update these forward-looking
statements or to conform them to future events or developments.

Media contact:

Carsten Thomsen-Bendixen
T +49-211-4579-544
carsten.thomsen-bendixen@eon.com

Josef Nelles
T +49-211-4579-3570
josef.nelles@eon.com

10.11.2010 Dissemination of a Corporate News, transmitted by DGAP -
a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.

DGAP's Distribution Services include Regulatory Announcements,
Financial/Corporate News and Press Releases.
Media archive at www.dgap-medientreff.de and www.dgap.de

---

Language: English
Company: E.ON AG
E.ON-Platz 1
40479 Düsseldorf
Deutschland
Phone: +49 (0)211 4579-0
Fax: +49 (0)211 45 79-5 01
E-mail: investorrelations@eon.com
Internet: www.eon.com
ISIN: DE000ENAG999
WKN: ENAG99
Indices: DAX, EURO STOXX 50
Listed: Regulierter Markt in Frankfurt (Prime Standard), Berlin,
Stuttgart, Hannover, Hamburg, München, Düsseldorf;
Terminbörse EUREX; Foreign Exchange(s) Mailand

End of Announcement DGAP News-Service

---