2011 Annual Report - OTCIQ.com

60 Forecast
E.ON Group’s Strategic Course in Upcoming
Financial Years
Implementing Our Strategy
In the years ahead, we will adjust E.ON’s business portfolio
in line with our strategy of cleaner & better energy. Our main
focus will be on expanding our operations in renewables,
generation outside Europe, and decentralized energy solutions.
These are the areas in which we see significant market opportunities
and can capitalize on our capabilities. We will therefore
direct our new growth investments at these businesses.
In Europe, we will sharpen the focus of our current position.
To achieve this, we will concentrate on activities in which we
can leverage our expertise as well as cross-border and crossbu
siness synergies of scale and scope into attractive returns.
Generation Renewables Optimization
& Trading
Planned Transformation of E.ON AG into a European
Company
The Board of Management intends to propose to the 2012
Annual Shareholders Meeting that E.ON AG be transformed
into a European Company (Societas Europaea, or “SE”). The
purpose of the transformation is for E.ON’s internationalization
(more than half of E.ON’s employees work outside Germany)
to be reflected in its governance and in the form of its incorporation.
If the Annual Shareholders Meeting approves the
change, E.ON would then work out, between it and its employee
representatives in Europe, an agreement regarding the involvement
of employees. When this step is completed, the transformation
would take effect, probably at the end of 2012.
Business Environment
External Reporting Segmentation 2012
Macroeconomic Situation
The OECD expects the global economy to contract somewhat
in 2012, resulting in a slight recession, but to expand again in
2013. Monetary policy will tend to spur economic activity, fiscal
policy (namely, tighter budgets) to dampen it. Uncertainty
on labor and credit markets will also serve as a brake on the
economy, according to the OECD.
Exploration &
Production
Change in Organizational Structure
As part of our Group-wide E.ON 2.0 program, in the second half
of 2011 we began the process of making far-reaching changes.
This process will continue, and in some cases be completed,
in 2012. It includes combining, effective January 1, 2012, the
businesses of E.ON Energy Trading and E.ON Ruhrgas to form
a new segment called Optimization & Trading. In addition,
the Exploration & Production unit, part of E.ON Ruhrgas until
the end of 2011, is now its own segment (see the graphic of
our external reporting segmentation for 2012).
Germany Other EU
Countries
Russia
Economic growth in the United States is expected to accelerate,
due primarily to rising demand for investment goods
and the anticipated end of restrictive fiscal policy.
The euro zone is expected to experience a slight recession in
2012 followed by a moderate recovery. The main brakes on
Europe’s economy are stagnant private consumption (although
this is expected to recover in 2013) and a decline in state
consumption expenditures due to budget tightening. Investment
activity is likely to be weak in the near term.
The economic outlook in the BRICs (Brazil, Russia, India,
China) varies by country. China is expected to benefit from
robust domestic demand but to have weaker net exports.
Brazil’s economy will receive impetus from infrastructure projects,
whereas Russia’s is still highly dependent on oil prices.