E.On posts record loss on power plant costs
German energy firm E.On has reported its biggest annual loss after setting aside €5.4bn (£3.8bn) in costs related to its gas and coal-fired power plants.
E.On reported a net loss of €3.2bn in 2014, compared with a profit of €2.14bn a year earlier.
It comes as European energy companies grapple with the sharp fall in oil prices.
A surge in renewable energy capacity has also driven many coal and gas-fired stations out of the market.
An over supply of electricity in E.On's domestic market and lower demand across Europe for electricity also hurt the firm.
In November, E.On announced plans to split its business in two.
It will spin off its conventional power generation business to focus on renewable energy and services.
The loss is the biggest since E.On was formed by the merger of German power groups VEBA and VIAG in 2000.
The €5.4bn impairment charge related to costs involving power generation at across Europe including those in the UK, Sweden and Italy.
E.On had already warned it would make a loss this year after booking €4.5bn in impairment charges in its fourth quarter.
In 2013, E.On decommissioned its Kingsnorth power station in Kent with demolition work beginning on the power station in April last year.
E.On is currently building a wind farm off the Brighton coast that it says will take three years to complete. E.On says the site will generate electricity for up to 290,000 homes and reduce CO2 emissions by up to 600,000 tonnes a year.
The energy firm also blamed currency effects and continued low interest rates in Europe for a decline in profits.
"Considering the continued difficult market environment in many countries, we're generally satisfied with our 2014 results, particularly since we achieved lasting cost reductions across our business and made a number of successful disposals," E.On chief financial officer Klaus Schaefer said.
"But it's also true that extremely low oil prices, adverse changes in currency rates, and a further decline in power prices are having a significant effect on our business."
E.On said it was "cautious," about the year ahead.
It forecast operating profit would be between €7bn and €7.6bn and underlying net profit total €1.4bn to €1.8bn.
In January, E.On became the first energy supplier in the UK to cut its standard gas tariff to reflect the fall in wholesale gas prices.
It announced an immediate 3.5%, cut in prices equivalent to £24 off an average annual household gas bill.
E.On supplies gas and electricity to 4.5 million homes in the UK.