FRANKFURT—Energy company E.ON SE's net profit rose in the first quarter of the year, following a deal on long-term gas contracts with Gazprom that allowed it to free up provisions, the company said on Wednesday.

E.ON said net profit rose to €1.17 billion ($1.33 billion), up from €1.06 billion a year earlier. Earnings before interest, taxes, depreciation and amortization came to €3.1 billion, about €200 million more than in the first quarter of 2015, helped by €600 million in released provisions and operating improvement in E.ON's gas trading business.

Stripped of the effects of the deal on gas terms with Gazprom, first-quarter earnings were slightly lower from a year earlier, E.ON said.

Gains from gas and newly commissioned power plants were partially offset by low market prices, the decommissioning of some generating capacity, divestments and a power plant outage in Russia, E.ON said.

E.ON, like other utilities, has been plagued by dramatically low wholesale prices amid a power glut spawned by a rise in renewable energy and low commodity prices.

E.ON confirmed its forecasts for 2016. In March, the company said the Gazprom deal would improve its outlook for the year and raised guidance for adjusted Ebitda to €6.4 billion-€6.9 billion, from an earlier forecast of €6 billion-€6.5 billion. That would still be below 2015's figure of €7.56 billion. Adjusted after-tax profit would be around €1.5 billion-€1.9 billion this year, E.ON said.

In the first quarter, adjusted after-tax profit was €1.3 billion, up 30% from €1 billion in the year-earlier quarter.

In June, E.ON hopes to gain shareholder approval for a plan to spin off conventional energy and trading activities into a new company, Uniper, listing around 53% of the new unit by year's end. Following the split, E.ON earlier said it expects earnings before interest and taxes this year to come to be in the €2.7 billion-€3.1 billion range.

Write to Monica Houston-Waesch at nikki.houston@wsj.com

(END) Dow Jones Newswires

May 11, 2016 03:55 ET (07:55 GMT)