'New' E.ON eyes net profit of up to 1 bn euros this year

German energy giant E.ON, which is spinning off its conventional power generation business to focus on renewables, unveiled Tuesday its full-year targets for the company in its new form.

E.ON said in a statement it is pencilling in bottom-line net profit of between 600 million euros and one billion euros ($680 million-$1.1 billion) for the new group specialising in renewable energy sources such as the wind and the sun.

Underlying or operating profit was projected to amount to 2.7-3.1 billion euros.

The figures do not include conventional coal-fired power generation activities that are being spun off into a separate unit Uniper.

As a result of Germany's transition from conventional carbon fuels to greener, cleaner sources of energy, the country's power utilities are facing enormous pressure on their margins.

The cost of having to close down their nuclear power plants and the heavy subsidies afforded to renewable energy have pushed them deeply into the red, the companies argue.

The glut of government-subsidised solar, wind and other renewable power has led to a collapse in wholesale electricity prices.

In order to tackle this, both E.ON and its rival RWE decided to split their conventional and renewable activities.

E.ON's new structure was put in place at the start of the year, with shareholders scheduled to vote on it in June and 53-percent of Uniper to be floated on the stock exchange this year.

"Even in view of the further deterioration of our market environment, we remain convinced that the spin-off is the right thing to do at the right time," said chief executive Johannes Teyssen.

"It's right for us to divide our operations into two companies and to enable them to develop their respective businesses in line with their own strategy.

"This sharper focus will enable E.ON and Uniper to better meet their respective challenges and systematically seize development opportunities," he said.

Last year, E.ON booked a huge loss of 7.0 billion euros due to massive writedowns on the value of its conventional electricity generation plants.