DUESSELDORF, Germany (Reuters) - Germany's No.1 utility E.ON (>> E.ON SE) slashed its dividend and said it expected core profit to decline in 2014 for the third year in a row, adding it saw no end to a sector crisis that has eroded profits at its gas and coal plants.

The group said on Wednesday it expected earnings before interest, tax, depreciation and amortisation (EBITDA) of 8.0-8.6 billion euros ($11-$11.9 billion) this year, after a 14 percent decline to 9.315 billion in 2013.

It also proposed a dividend of 0.60 euros per share for 2013, nearly half the 1.10 euros paid a year earlier.

Analysts had, on average, expected 2014 EBITDA of 8.4 billion euros and a dividend of 0.66 euros per share for 2013.

Across Europe, utilities have been surprised a by a surge in renewable energy sources, most notably solar and wind, basically replacing power from many gas and coal-fired power plants and leading wholesale power prices to collapse.

"Taking a sober view of what lies ahead, there are few indications that our market environment will rapidly or tangibly improve," E.ON Chief Executive Johannes Teyssen wrote in a letter to shareholders.

The crisis has led French peer GDF Suez (>> GDF SUEZ) to book a 15-billion euro charge on its power assets, while German rival RWE (>> RWE AG) earlier this month posted its first net loss since 1949.

E.ON, whose shares have tumbled 54 percent over the last four years, trades at 11.0 times estimated 12-month forward earnings, according to Thomson Reuters, below the 13.2 times for the European utility sector.

($1 = 0.7212 euros)

(Reporting by Christoph Steitz; Editing by Victoria Bryan)

Stocks treated in this article : GDF SUEZ, RWE AG, E.ON SE