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UPDATE 2-Germany's E.ON unruffled by rouble
December 17, 2014 / 12:31 PM / 3 years ago

UPDATE 2-Germany's E.ON unruffled by rouble

* Russia is E.ON’s most important foreign market

* Company will monitor situation closely -spokesman

* Shares down 0.8 percent (Recasts, adds strategy detail, updates shares)

By Christoph Steitz and Tom Käckenhoff

FRANKFURT/DUESSELDORF, Dec 17 (Reuters) - E.ON’s investment strategy in Russia remains unaffected by the plunge in the rouble, the company said on Wednesday, seeking to allay concerns over a business it plans to spin off in 2016 as part of a major overhaul.

The weakening of the rouble in the face of Western sanctions over the Ukraine crisis has already hit profits at the German utility’s Russian operations, in which it has invested about 6 billion euros ($7.5 billion) since 2007.

E.ON has repeatedly sought to reassure investors, but the rouble’s 20 percent plunge against the dollar over the past two days triggered a massive interest rate increase by the central bank and cranked up the presure on companies on the ground.

“Our business in Russia has been a solid profit driver for six years,” a spokesman for the company said in an emailed statement on Wednesday, adding that the swings in the rouble would not affect its long-term investment plans.

“E.ON continues to have faith in the stable investment conditions that have been guaranteed by the Russian government so far.”

He acknowledged, however, that E.ON continues to monitor the Russian situation closely.

The company, shares in which were down 0.8 percent at 1403 GMT, has ties with Russia on several levels. It imports about half of its gas from Gazprom and the country contributes more than 7 percent of E.ON’s core profit.

E.ON owns 10.3 gigawatts of Russia’s generation capacity, more than 4 percent of the total, and is also a partner in the huge Yuzhno Russkoye gas field in Siberia.

Nevertheless, the company announced last month that it would spin off its power plant business along with its Brazilian and Russian units in a move that is widely viewed as an effort to rid itself of problematic assets.

Profits from Russia were down by nearly a fifth in the first nine months of the year because of the currency weakness. ($1 = 0.8032 euros)

Editing by David Goodman

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