Rising power prices helped Germany's E.ON, the world's largest utility by sales, to boost nine-month underlying operating profit by 12 percent and beat market expectations.
Adjusted for one-off items, earnings before interest and tax in the nine months through September rose to 7.1 billion euros ($10.4 billion), more than the average estimate of 6.89 billion euros in a Reuters poll of 14 analysts.
"Earnings growth was very solid," said London-based analyst Christopher Kuplen from Credit Suisse. "The UK and Nordic units performed particularly well."
Britain is the company's second-biggest market and E.ON said in October it plans to expand in the Nordic region by buying the remaining stakes it does not yet own of its Swedish unit from competitor Statkraft.
E.ON had been buying competitors abroad to become less dependent on Germany. But even on the German power market, Europe's largest, prices rose to records in 2006, boosting the profits of power companies, which sell almost all of their power one or two years before it is generated.
E.ON on Tuesday specified its expectations for 2007 net profit, saying net income adjusted for book gains and discontinued operations will increase at a "comparable" rate to the 5 to 10 percent rise forecast for adjusted EBIT.
Adjusted net income in the first nine months of the year was up 22 percent to 4.2 billion euros.
Shares were nearly flat at 135.15 euros, while the German benchmark index fell 0.6 percent and the DJ Euro Stoxx utilities index declined 0.8 percent.
Net income after minorities in the nine months rose to 5.32 billion euros from 3.14 billion euros. Thirteen analysts polled by Reuters had estimated net profit of 4.906 billion euros.
Economic net debt rose to 17.98 billion euros at the end of September from 16.4 billion euros at the end of June, E.ON said.
E.ON is the world's largest utility by 2006 sales, followed by Electricite de France. Smaller German competitor RWE plans to publish earnings on Wednesday.