Bloomberg News

EDF Net Income Triples on Higher French Nuclear Power Output

February 17, 2012

(Adds comment from chief finance officer in fifth paragraph.)

Feb. 16 (Bloomberg) -- Electricite de France SA, Europe’s biggest power generator, said 2011 profit tripled on higher French and U.K. nuclear output, and forecast spending on aging reactors would increase over the next three years.

Net income advanced to 3.01 billion euros ($3.92 billion) from 1 billion euros a year earlier when the utility made provisions on Italian and U.S. operations, Paris-based EDF said today in a statement. Adjusted for one-time items, results were in line with analyst estimates.

The utility expects investment to reach as much as 15 billion euros in 2015, compared with 10.5 billion euros last year, to pay for reactor equipment, safety upgrades and new atomic plants.

Spending is rising because of stricter safety measures after the Fukushima disaster in Japan and a program to keep existing plants running for as long as 60 years. France’s state auditor has estimated the utility will have to invest 55 billion euros through 2025. EDF operates 58 reactors in France that provide about three quarters of the country’s power output.

“The spending on safety will have to be done faster than what we had anticipated,” Thomas Piquemal, chief financial officer, said at a presentation today. Ten billion euros of the total are related to safety measures ordered by the French atomic watchdog.

The utility will stick to a previously forecast that spending on French nuclear plants will at least double to 3.4 billion to 3.6 billion in 2015, compared with 1.7 billion euros in 2010, he said.

EDF shares dropped as much as 69.5 cents, or 3.7 percent, to 17.99 euros in Paris. The stock traded at 18.405 euros as of 4:28 p.m. local time.

Earnings before interest, tax, depreciation and amortization were 14.82 billion euros, an increase of 4.7 percent once the previous year’s figure is adjusted for exceptional items. EDF had been targeting Ebitda growth of 4 percent to 6 percent in 2011.

Proposed Dividend

EDF reported non-recurring items last year of 510 million euros for operations in Italy, Swiss utility Alpiq and shares in Veolia Environnement SA. Proglio led that waste water utility before moving to EDF.

EDF proposed a full-year dividend of 1.15 euros a share, the same as 2010. The 2012 payout will be “at least stable” compared with this year, EDF said.

Debt fell by more than 1 billion euros to 33.3 billion euros at the end of 2011, according to today’s statement. Debt could increase by 1.5 to 2 billion euros after the planned takeover of Edison SpA and due to higher investment, Piquemal said today.

“The results were driven by good performance of the generation fleet in France and the U.K.,” Per Lekander, an analyst at UBS AG in London, said in a note.

EDF, which is building a 1,650-megawatt EPR-model reactor in France, increased nuclear output 3.2 percent to 421.1 terawatt-hours last year while hydroelectric production dropped 26 percent amid drier weather, according to the grid operator. Output at EDF’s plants in the U.K. climbed 16 percent.

EDF expects French nuclear power production to be 420 terawatt-hours to 425 terawatt-hours this year. It also forecasts higher atomic output in the U.K.

The utility said the availability of its domestic reactor fleet last year was 80.7 percent, compared with 78.2 percent in 2010. Proglio was asked by Prime Minister Francois Fillon to make raising this measure a priority when he became chief executive in November, 2009.

Piquemal declined to confirm a previous target of making 85 percent of the country’s reactors available for electricity production by 2015 because of “uncertainty” about major works at reactors for safety and new equipment.

The outlook for French nuclear power output this year is “cautious,” he said. The utility has programmed six planned reactor outages due to 10-year safety inspections this year and steam generator replacements on two reactors, according to an earnings presentation.

EDF said replacing steam generators halts a reactor for 50 extra days.

--Editors: Will Kennedy, Tony Barrett

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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