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European power companies cut dividends as energy subsidies hit earnings

  • European utilities E.ON (EONGY) and Enel (ENLAY) cut their annual dividends as part of cost saving programs in response to falling power prices.
  • E.ON is reducing its dividend to €0.60/share vs. €1.10/share paid out last year, but investors are reacting positively to a further reduction in debt, to €32B at the end of 2013 from €35.8B at the end of 2012.
  • Enel is cutting its dividend by 13% to €0.13 but says it will lift its payout ratio to at least 50% of ordinary net profit, which excludes special items, from its current payout policy of at least 40%; it plans to sell assets worth ~€4.4B and cut costs further in a bid to chip away at its huge debt by a further 7.3% this year.
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