By Jonathan Davies

Energy supplier E.On has reported its largest ever annual losses after setting aside €5.4bn (£3.8bn) to cover costs at gas and coal-fired plants.

The German company posted a loss of €3.2bn in 2014, compared with a profit of €2.14bn in 2013.

E.On, like many others, have been hit by falling oil prices in the second half of 2014. And the rise in focus on renewable energy has put a squeeze on gas and coal-fired markets, which has led to E.On having to put huge sums of money towards watering down such plants.

It also suffered from oversupply of electricity in the domestic market and from weak demand in Europe.

"Considering the continued difficult market environment in many countries, we're generally satisfied with our 2014 results, particularly since we achieved lasting cost reductions across our business and made a number of successful disposals," E.On chief financial officer Klaus Schaefer said.

"But it's also true that extremely low oil prices, adverse changes in currency rates, and a further decline in power prices are having a significant effect on our business."