EDF Reports 47% Drop in First-Half Profit Amid French, U.S. Nuclear Delays
Electricite de France SA, Europe’s biggest power generator, reported a 47 percent drop in first- half profit after making a provision on nuclear development in the U.S. because of financing delays.
Net income was 1.7 billion euros ($2.2 billion) in the first half compared with 3.1 billion euros the previous year, EDF said in a statement today. That missed the 2.52 billion euro median estimate of nine analysts surveyed by Bloomberg. Earnings before interest, tax, depreciation and amortization rose 4 percent to 10.4 billion euros, EDF said. The estimate was for 10 billion euros.
The company reiterated a forecast for growth in earnings before interest, tax, depreciation and amortization of 3 percent to 5 percent and a net debt-to-Ebitda ratio of 2.5 to 3.
The utility took a provision of 1.1 billion euros for its North American activities due to delays in developing nuclear reactors and said building its Flamanville EPR model in France would cost more and be delayed.
Extension of the Tartam power-rate system until the end of the year will cost EDF another 265 million euros, the utility said in the statement.
Chief Executive Officer Henri Proglio has pledged to raise French nuclear output in 2010 to boost profitability and reach a target of making 85 percent of the country’s reactors available for electricity production within five years. Storms and strikes pushed atomic output to its lowest level in a decade last year.
EDF has expanded in Europe, China and the U.S., driving up debt, as it braces for a state-led overhaul of the French power market. The utility is selling its U.K. grid to cut borrowings.
Strikes at EDF’s reactors in France in the second quarter of last year led to delays in refueling and maintenance, forcing the utility to buy power on the spot market and operate more expensive coal-and gas-fueled plants. The effects of the strikes are still being felt on its reactor maintenance schedule.
The French company raised to 5 billion euros the estimated cost of building its 59th domestic reactor in Flamanville, Normandy from 4 billion euros. EDF is also developing new- generation atomic plants in China and has plans for them in the U.K. and U.S.
EDF ran its reactors at an availability rate of 78 percent in 2009, compared with 79.2 percent in 2008 and 80.2 percent in 2007. The rate is a measure of how much power the utility can produce relatively cheaply from nuclear stations, compared with other plants or spot-market prices.
Technical problems with steam generators, stators and transformers which have plagued French reactors, will be fixed in the coming years as parts are replaced, the utility has said.
The French Senate is considering a law that would force EDF to sell as much as a quarter of its nuclear output to rivals such as GDF Suez SA. Debate on the legislation has focused on the price EDF will charge for the power on the wholesale market and whether the rate will cover production costs.
The law would do away with the so-called Tartam system of rates, although it is unclear when.