EDF Falls, French Power Rises as Nuclear Output Forecast Cut

Updated on
  • Demands from safety regulator will lead to extended outages
  • Utility confirms targets for 2016 earnings, debt/Ebitda ratio

Electricite de France SA fell the most in two weeks in Paris trading after cutting its forecast for nuclear power production this year. French power prices rose as output is near the lowest in four years.

EDF said Tuesday that requests from France’s atomic safety regulator will cause extended power-plant outages, resulting in nuclear output of 395 to 400 terawatt-hours this year, down from original guidance of 408 to 412 terawatt-hours. The shares dropped as much as 3.7 percent. French power for delivery next quarter rose to a seven-month high while contracts for the next two months climbed to records.

“EDF Group has to conduct additional controls during the second half of the year in order to demonstrate that some components, mainly steam generators,” can operate safely, the company said in a statement.

It’s the utility’s second downward revision to output this year, making it the lowest since 2009, Sofia Savvantidou, an analyst at Exane BNP Paribas in London, said in an e-mailed note.

Forecast Confirmed

EDF confirmed its forecast for 2016 earnings before interest, taxes, depreciation and amortization of 16.3 billion euros ($17.9 billion) to 16.8 billion euros, incorporating the effect of a Conseil d’Etat decision in June on an earlier tariff shortfall. The utility also reiterated targets for its debt-to-Ebitda ratio and payout ratio.

“This news is negative given the positive effect from potential tariff catch-up was already well-appreciated by investors,” Xavier Caroen, an analyst at Bryan Garnier & Co. in Paris, said in a note.

EDF fell as much as 3.7 percent, the biggest intraday loss since July 6. It traded 1.7 percent lower at 10.92 euros as of 2:46 p.m. in Paris, the largest decliner in the Stoxx Europe 600 Utilities index.

French nuclear output fell to near the lowest since May 2012 as French regulator Autorite de Surete Nucleaire asked EDF to investigate the steam generator channel heads in 18 of its 58 nuclear plants in June. The regulator also suspended the generator license of EDF’s Fessenheim-2 reactor, which will remain shut until issues are resolved, ANS said on its website. EDF also extended by five months the outage of its Bugey-5 reactor, which halted in August, its website shows.

French power prices for August rose as much as 2.3 percent to a record 29.55 euros per megawatt hour, while the September contract climbed 3.4 percent to an all-time high, according to broker data compiled by Bloomberg. Next-quarter prices added 3.7 percent to 39.30 euros per megawatt hour, broker data show.