Endesa (PK) (USOTC:ELEZF)
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German utility E.ON AG (EOAN.XE) Wednesday said it would record impairment charges of EUR2.6 billion in the third quarter of 2010, due to deteriorated trading conditions for assets it acquired in 2007 in the wake of the financial and economic crisis.

The company said that poor electricity and commodity prices have led to "significantly lower margins and capacity utilization," reducing the expected earnings contributions from its businesses in Italy, Spain and France in the medium to long-term.

Around EUR1.1 billion of the impairment charges is related to goodwill, E.ON said in a mandatory financial markets filing.

A further EUR1.5 billion in charges are on other assets, mainly in connection with the activities in Italy, Spain and France acquired from Italy's Enel Spa (ENEL.MI) and Spain's Acciona SA (ANA.MC) and Endesa SA (ELE.MC) in 2008.

The announcement initially sent E.ON shares up around 2% lower in early trading Wednesday. At 0753 GMT the shares traded EUR0.04 or 0.2% higher at EUR22.42, outperforming a broadly softer market.

E.ON said that the impairment charges will reduce its net profit, but won't affect adjusted earnings before interest and taxes or adjusted after-tax profit, which is the basis for annual dividend payments to shareholders.

E.ON also Wednesday provided preliminary results for the first nine months of the year and confirmed its 2010 earnings outlook. E.ON will release third quarter earnings Nov. 10.

The company said that adjusted EBIT in the January to September period rose to EUR8 billion, up 9% on the year from EUR7.3 billion.

It added that adjusted EBIT is still expected to come in flat to 3% higher on the year while adjusted after-tax profit will be on the 2009 level.

-By Jan Hromadko, Dow Jones Newswires; +49 69 29 725 503; jan.hromadko@dowjones.com