EDF Raises Earnings Target After First-Half Profit Increases

Electricite de France SA, Europe’s biggest power generator, increased its forecast for annual profit growth after cold weather and higher hydroelectricity output drove first-half results higher.

Earnings before interest, taxes, depreciation and amortization will grow at least 3 percent, excluding results from the Italian Edison unit, EDF said today in a statement. The utility previously expected Ebitda to hold steady or rise no more than 3 percent.

Profit by that measure rose 6.9 percent in the first half to 9.7 billion euros ($12.9 billion), beating the 9.24 billion-euro median estimate of five analysts surveyed by Bloomberg. Net income advanced to 2.9 billion euros from 2.78 billion euros.

“The first half-year 2013 was marked by good operating performance,” Chief Executive Officer Henri Proglio said in the statement. Growth was driven by results in EDF’s home market as the winter was colder than usual, driving up market prices, while hydropower output expanded 25 percent. EDF also reported a “favorable outcome” of arbitration on gas contracts in Algeria between Edison and Sonatrach.

EDF rose as much as 4.9 percent to 21.215 euros in Paris trading, and was at 21.195 euros as of 9:13 a.m. local time.

Tariff Revision

France’s government has granted EDF tariff increases at home, where it operates 58 nuclear reactors. Energy Minister Philippe Martin authorized EDF to raise the regulated domestic power rate by 5 percent on Aug. 1 and by a further 5 percent a year later. While more than double last year’s 2 percent increase, it’s less than the regulator’s recommendation of 6.8 percent to 9.6 percent this year to cover a shortfall in costs.

EDF today kept a target for French atomic output this year of 410 terawatt-hours to 415 terawatt-hours after a 2012 decline to 405 terawatt-hours. The utility is also in talks with the U.K. about developing new atomic plants there and said it has reached a deal to allow the sale of U.S. nuclear assets.

The Paris-based company has agreed with Chicago-based Exelon Corp. (EXC) on an option to sell its 49.99 percent stake in CENG, the operator of five nuclear plants in the U.S., from January 2016 to June 2022, it said. EDF will also get an exceptional dividend of $400 million from CENG.

The French utility reiterated a plan to save 1 billion euros and said net investments will be 12 billion euros to 12.5 billion euros in 2013. Debt shrank to 33.7 billion euros at the end of June from 39.2 billion euros in December, it said.

EDF faces billions of euros of costs to improve safety at its French reactors after the authorities tightened rules following the 2011 meltdown at Japan’s Fukushima plant. French President Francois Hollande has vowed to lower dependence on atomic energy and shut EDF’s oldest reactor in 2016. The utility’s reactors supply three-quarters of France’s power output, making it the world’s most nuclear-dependent country.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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