EDF Says Spending to Peak Next Year After 2013 Profit Rises
Electricite de France SA (EDF), Europe’s biggest power generator, promised to rein in spending on new installations including a long-delayed atomic plant in Normandy. The shares surged the most in six months.
The utility, which is expanding nuclear operations abroad, said mounting investment will peak next year at 14 billion euros ($19 billion) and drop to last year’s 12 billion-euro level by 2018, it said in an earnings statement today.
EDF has a 16 billion-pound ($26.5 billion) deal to build reactors in the U.K. It’s also developing a reactor in Normandy and two in China, as well as a gas terminal in France. At the same time, the utility has increased spending on its oldest French reactors, which have entered a period of prolonged halts for safety upgrades and maintenance.
The utility set the dividend at 1.25 euros a share and said it would report positive free cash flow after payouts to investors in 2018.
The shares rose as much as 5.4 percent, the biggest jump since July 30, and were trading up 3.2 percent at 26.93 euros at 12:47 p.m. in Paris.
Investment in 2018 will be brought down to last year’s level, not counting a plan to deploy smart meters in French homes and “strategic operations,” according to a presentation.
The spending peak and subsequent drop is “an investment trajectory that is well-controlled,” Chief Financial Officer Thomas Piquemal said in Paris.
Net income rose to 3.52 billion euros in 2013 from 3.3 billion euros a year earlier, the Paris-based company said. That missed the 3.67 billion-euro median estimate of 11 analysts surveyed by Bloomberg.
Earnings before interest, taxes, depreciation and amortization climbed 5 percent to 16.8 billion euros, beating the 16.7 billion-euro median estimate of 15 analysts. Cost cuts of 1.3 billion euros contributed to the “good performance,” Chief Executive Officer Henri Proglio said. The utility didn’t set a new target for savings in the coming years, although Piquemal said “efforts would continue.”
EDF is targeting Ebitda growth of at least 3 percent this year and said 2014 spending is set at between 13 billion and 13.5 billion euros compared with 12.2 billion euros in 2013. Net French investment rose 10 percent due mostly to maintaining atomic reactors.
Net financial debt was 35.5 billion euros at the end of December, down 3.7 billion euros from the previous year.
EDF plans to start its Flamanville reactor in Normandy in 2016 and the Dunkirk liquefied natural gas terminal in 2015, it confirmed today.
The company set a target for 2014 atomic output of 410 to 415 terawatt-hours after reporting 403.7 terawatt-hours for 2013.
EDF missed a target for 2013 nuclear output because planned outages were longer than expected and demand dropped due to warm December weather and strong wind-power generation, according to today’s statement.
The utility said the volume of planned nuclear outages this year will be “on par” with 2013.
EDF faces an estimated 55 billion euros of costs to improve safety and extend lives of French plants through 2025 after regulators tightened rules following the 2011 disaster at Japan’s Fukushima nuclear plant.
The company operates 58 nuclear reactors in France that provide almost three-quarters of power output in the world’s most nuclear-dependent country. President Francois Hollande is planning a law by the end of the year that could lower the country’s reliance on nuclear power.
The government has decided nuclear will remain part of the energy mix “for a long time,” Proglio told reporters today. Replacement of aging atomic plants with new technology, possibly including EPR reactors, will eventually occur, he said.
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