FRANKFURT, Aug 10 (Reuters) - E.ON, the world's largest utility, designated a new chief executive on Monday as it works to earn more money from 18 billion euros ($25.54 billion) of acquisitions in Italy, Spain and Russia and match the profitability of peers.
The chief operating officer and current deputy chief executive, Johannes Teyssen, will succeed chief executive Wulf Bernotat in May 2010, E.ON said after markets had closed.
A person familiar with the matter told Reuters last month that Teyssen was set to get the job.
Teyssen, a lawyer and economist from Hildesheim in northern Germany, has worked his entire 20-year career within E.ON or in companies that later merged to become E.ON, starting in the department for energy law at power provider PreussenElektra.
'Teyssen knows the company inside out,' said London-based Credit Suisse analyst Christopher Kuplent, speaking ahead of E.ON's announcement.
'That prepares him in an excellent way for his main task: streamlining the company and making it work more efficiently.'
Teyssen has to earn money where Bernotat failed and has to regain investor confidence. The current chief had surprised investors in May this year when he said he was not available for a new term. He later explained his departure by saying he was seeking a new task in the global energy industry.
Bernotat spent some 30 billion euros to expand in the 6 years he has been at the helm of E.ON.
However, he's failing to earn money from power plants and household customers in new major markets such as Russia, Italy, Spain and France -- while competitors such as Enel succeed.
Accordingly, E.ON shares are performing worse than those of peers or other German stocks and are valued lower than competitors such as GDF Suez and EDF.
E.ON stock has dropped 34 percent in 12 months, while German competitor RWE has lost 23 percent in the period and the German benchmark index DAX dropped 17 percent.
The power provider is valued at 10 times estimated earnings, the 12th-lowest valuation among 32 European peers, compared with a multiple of 44 at which Portuguese windpower provider EDP Renewables trades, according to Reuters data.
'E.ON needs to be fixed,' said a London-based analyst who declined to be identified.
'Investors don't trust the company as it's the most complicated and opaque company in Europe now,' the analyst said.
Teyssen might be less keen than Bernotat to create a behemoth.
When he was chief of E.ON Energie, E.ON's power generation unit, from 2003 to 2007, he made only small takeovers in the Czech Republic and Romania.
Bernotat's aggressive expansion strategy -- which did not shy away from a direct confrontation with the Spanish government when he bid some 40 billion euros for peer Endesa -- backfired when power prices slumped and debt became more expensive in the finance crisis.
E.ON's most recent cost-cutting programme to boost profits by 1.5 billion euros, dubbed 'performtoWin,' might show how the two differ, as Bernotat's management style sometimes antagonizes workers, while employees are more receptive to Teyssen.
Bernotat enraged workers by threatening that the programme might involve redundancies, leading 5,000 workers to demonstrate at E.ON's headquarters in Duesseldorf, with the company guarding its building with German shepherds.
Teyssen worked out things differently: He sat down with workers and hammered out an agreement in less than a month after the standoff.
Worker representatives see him as someone who is more familiar with their issues and the company's day-to-day operations than Bernotat, whom they describe as dwelling in elevated strategic planning.
Teyssen, a supporter of Bayern Munich, draws loyalty from many sides.
A former colleague who worked four years with him described how Teyssen speaks without a script and uses a dry sense of humour, voiced in a northern German accent, to catch people's attention.
The person's support still showed, even though he works in a different E.ON unit now. 'I'm also doing it for Teyssen,' he said, without being asked, explaining why he was happy to talk about the future E.ON chief.
(Reporting by Peter Dinkloh; Editing by Bernard Orr, Gary Hill) Keywords: EON/ (peter.dinkloh@reuters.com; +4969 7565 1345; Reuters Messaging peter.dinkloh.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The chief operating officer and current deputy chief executive, Johannes Teyssen, will succeed chief executive Wulf Bernotat in May 2010, E.ON said after markets had closed.
A person familiar with the matter told Reuters last month that Teyssen was set to get the job.
Teyssen, a lawyer and economist from Hildesheim in northern Germany, has worked his entire 20-year career within E.ON or in companies that later merged to become E.ON, starting in the department for energy law at power provider PreussenElektra.
'Teyssen knows the company inside out,' said London-based Credit Suisse analyst Christopher Kuplent, speaking ahead of E.ON's announcement.
'That prepares him in an excellent way for his main task: streamlining the company and making it work more efficiently.'
Teyssen has to earn money where Bernotat failed and has to regain investor confidence. The current chief had surprised investors in May this year when he said he was not available for a new term. He later explained his departure by saying he was seeking a new task in the global energy industry.
Bernotat spent some 30 billion euros to expand in the 6 years he has been at the helm of E.ON.
However, he's failing to earn money from power plants and household customers in new major markets such as Russia, Italy, Spain and France -- while competitors such as Enel succeed.
Accordingly, E.ON shares are performing worse than those of peers or other German stocks and are valued lower than competitors such as GDF Suez and EDF.
E.ON stock has dropped 34 percent in 12 months, while German competitor RWE has lost 23 percent in the period and the German benchmark index DAX dropped 17 percent.
The power provider is valued at 10 times estimated earnings, the 12th-lowest valuation among 32 European peers, compared with a multiple of 44 at which Portuguese windpower provider EDP Renewables trades, according to Reuters data.
'E.ON needs to be fixed,' said a London-based analyst who declined to be identified.
'Investors don't trust the company as it's the most complicated and opaque company in Europe now,' the analyst said.
Teyssen might be less keen than Bernotat to create a behemoth.
When he was chief of E.ON Energie, E.ON's power generation unit, from 2003 to 2007, he made only small takeovers in the Czech Republic and Romania.
Bernotat's aggressive expansion strategy -- which did not shy away from a direct confrontation with the Spanish government when he bid some 40 billion euros for peer Endesa -- backfired when power prices slumped and debt became more expensive in the finance crisis.
E.ON's most recent cost-cutting programme to boost profits by 1.5 billion euros, dubbed 'performtoWin,' might show how the two differ, as Bernotat's management style sometimes antagonizes workers, while employees are more receptive to Teyssen.
Bernotat enraged workers by threatening that the programme might involve redundancies, leading 5,000 workers to demonstrate at E.ON's headquarters in Duesseldorf, with the company guarding its building with German shepherds.
Teyssen worked out things differently: He sat down with workers and hammered out an agreement in less than a month after the standoff.
Worker representatives see him as someone who is more familiar with their issues and the company's day-to-day operations than Bernotat, whom they describe as dwelling in elevated strategic planning.
Teyssen, a supporter of Bayern Munich, draws loyalty from many sides.
A former colleague who worked four years with him described how Teyssen speaks without a script and uses a dry sense of humour, voiced in a northern German accent, to catch people's attention.
The person's support still showed, even though he works in a different E.ON unit now. 'I'm also doing it for Teyssen,' he said, without being asked, explaining why he was happy to talk about the future E.ON chief.
(Reporting by Peter Dinkloh; Editing by Bernard Orr, Gary Hill) Keywords: EON/ (peter.dinkloh@reuters.com; +4969 7565 1345; Reuters Messaging peter.dinkloh.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.