Germany's largest utility E.ON suffered its biggest ever annual loss in 2014 after booking billions of euros in charges on its ailing power plants, clearing the way for it to spin off assets that are suffering from ultra-low wholesale prices.

Chief executive Johannes Teyssen warned the coming year will not much better. He said: "It will be as hard a year as 2014, if not harder. But we will achieve what we intend to achieve. We are in the middle of a big change, but within that period of change we will not for a moment lose sight of the markets and our clients."

Teyssen also confirmed preparations to spin off its conventional power and gas businesses into a new company will be made in 2015.

Europe's power companies are having to adapt to big changes in their industry caused by a steep decline in oil prices and a surge in renewable energy capacity that has driven many coal- and gas-fired plants out of the market.

In the most drastic corporate response yet to the crisis, E.ON announced plans in November 2014 to split its business. It will spin off its conventional power generation business to focus on renewables, power grids and services.

Analysts, who have on average a "hold" rating on the stock according to Reuters data, have been divided over the group's move to split in two. Some analysts welcome the separation of the generation business, while others fail to see how this will create value for investors.

Shares in the company were up around 1% at 12.05pm on 11 March, underperforming a 1.6% rise in the German bluechip index.

E.ON swung to a net loss of €3.2bn (£2.27bn, $3.4bn) in 2014, compared with a profit of €2.14bn a year earlier, the company said. Analysts had, on average, expected a net loss of €3.3bn.

The loss, the biggest since it was formed in 2000, was triggered by €5.4bn in impairment charges on power plants, including assets in Britain, Sweden and Italy.