European power companies cut dividends as energy subsidies hit earnings

|By:, SA News Editor

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.