Germany's E.ON Cuts Russia Exposure, Signals Nord Stream 1 Risk

ESSEN, Germany (Reuters) — Germany's E.ON has joined other energy firms in paring its Russian exposure, adding that a 1.1 billion euro ($1.2 billion) stake it holds in the Nord Stream 1 gas pipeline could lose value as a result of Moscow's invasion of Ukraine.

E.ON, which is Germany's biggest energy firm, has no long-term supply contracts directly with Russian producers but buys some gas from Gazprom trading companies in Europe.

"In view of the war in Ukraine, we have stopped procuring new amounts from these companies," CEO Leonhard Birnbaum told E.ON's annual press conference.

E.ON, Europe's largest operator of energy networks, holds a 15.5% stake in Nord Stream 1 via its pension fund, the pipeline is majority owned by Gazprom and forms the main route through which Russian gas currently flows to Germany.

The German company said it mainly saw risks for commodity markets, associated credit and liquidity risks as well as valuation risks for investments, including its Nord Stream 1 stake.

Nord Stream 2, which would have doubled the capacity of gas Russia can deliver to Europe, was suspended last month by Germany in the run-up to the Russian invasion of Ukraine, which Moscow describes as a "special operation".

Shares in E.ON were down 0.5% at 0939 GMT, underperforming a 2.3% gain in Germany's benchmark DAX index.

E.ON also said it expects adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of 7.6 billion to 7.8 billion euros ($8.3 billion to $8.6 billion) in 2022, down from 7.9 billion in 2021.

That takes into account the absence of profits from E.ON's nuclear power plants, most of which have been switched off under Germany's nuclear exit roadmap, but still contributed 1.6 billion euros of adjusted EBITDA in 2021.

E.ON said its 2022 profit forecast was subject to future developments surrounding the Russia-Ukraine conflict, the full extent of which was currently impossible to determine.

($1 = 0.9106 euros)

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