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EDP Plans to Cut Debt After Borrowing Rose to 16.3 Billion Euros

EDP-Energias de Portugal SA, the country’s biggest power company, plans to cut debt after total borrowing swelled to 16.3 billion euros ($23 billion) at the end of 2010.

EDP is not assuming it will post any “meaningful or material” capital gains from asset disposals this year, Chief Financial Officer Nuno Alves said on a conference call today. The company yesterday said it targets cash proceeds of 500 million euros from asset disposals in 2011.

The Lisbon-based company said in a presentation today that it has 5.8 billion euros of cash and liquidity facilities available, and that its funding needs over the next 24 months are covered.

The former power monopoly’s debt increased as it invested in dams and wind parks in Europe, Brazil and the U.S. to rely less on fossil fuels while tapping government incentives for alternative energy. EDP in November cut its average annual investment target for 2011 and 2012 to 2.1 billion euros from an earlier forecast of 2.4 billion euros.

EDP today said it plans to invest about 2.2 billion euros in 2011 and 2 billion euros in 2012. It forecasts “low single digit growth” in earnings before interest, tax, depreciation and amortization and in profit for 2011, according to a presentation. EDP yesterday said full-year net income rose 5.4 percent to 1.08 billion euros.

Profit Forecast

The utility on May 20 forecast profit will rise annually by an average 6 percent to 8 percent in the 2009-2012 period, while Ebitda will climb 7 percent to 8 percent.

EDP in May forecast total installed capacity will increase 20 percent to 24.6 gigawatts in 2012, with wind projects and hydropower plants accounting for 66 percent. A 1-megawatt plant can supply about 1,000 average European homes. The company’s installed capacity increased 7 percent to 22 gigawatts in 2010 and total output rose 9 percent, EDP said on Feb. 3.

EDP Renovaveis SA, the company’s renewable-energy division, plans to install 0.8 gigawatts to 0.9 gigawatts of capacity a year in 2011 and 2012.

EDP shares have climbed 12 percent this year, giving the company a market value of 10.2 billion euros. The Portuguese government owns 20 percent of EDP and state-owned bank Caixa Geral de Depositos SA holds 5 percent.

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