EDF Advances in Paris After Raising Earnings Growth ForecastTara Patel
Electricite de France SA, Europe’s biggest power generator, jumped to a 1 1/2-year high in Paris trading after increasing its forecast for annual profit growth.
EDF rose 7.4 percent to 21.725 euros, the highest closing price since Nov. 3, 2011. Trading volumes were more than twice the three-month daily average.
Earnings before interest, taxes, depreciation and amortization will grow at least 3 percent this year, excluding results from the utility’s Italian Edison unit, EDF said today in a statement. It previously expected Ebitda to hold steady or rise no more than 3 percent.
Profit by that measure climbed 6.9 percent in the first half to 9.7 billion euros ($12.9 billion) after a cold winter boosted demand and hydropower output rose. That beat the 9.24 billion-euro median estimate of five analysts surveyed by Bloomberg. Net income advanced 4.3 percent to 2.9 billion euros.
The earnings are “excellent,” Julien Desmaretz, an analyst at Bryan, Garnier & Co., wrote in a note. EDF will benefit from higher French tariffs in the second half, he said.
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.
“The first half-year 2013 was marked by good operating performance,” Chief Executive Officer Henri Proglio said in the statement. Growth was driven by cold weather in France, which bolstered market prices, and a 25 percent jump in hydro output. EDF also reported a “favorable outcome” of arbitration over gas contracts in Algeria with supplier Sonatrach.
The Paris-based company 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 expects a decision on whether to push ahead with new nuclear reactors in the U.K. before the end of the year, Proglio said at a presentation of the results. He also announced a deal to allow the sale of U.S. nuclear assets.
EDF has agreed with Chicago-based Exelon Corp. 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.
Proglio today reiterated that spending on safety and extending the lives of French atomic plants is estimated at 55 billion euros through 2025.