By Geraldine Amiel
PARIS--Electricité de France SA (EDF.FR) Thursday lowered its
nuclear output target for the year but kept its financial
objectives as it reported a 6.9% increase in revenue for the first
nine months of the year, thanks to price hikes in the summer, the
integration of Edison's sales and the colder weather than usual in
the first half.
EDF said it now expects its nuclear power generation to amount
to 405 to 410 terawatts an hour, or TWh, due to longer-than-planned
reactor outages, notably in the third quarter. The group initially
targeted nuclear output for the year of 415 TWh.
EDF, one of the world's largest power producers, has set
ambitious electricity production targets as it seeks to become one
of the biggest European power providers. The group has based its
strategy on the low-cost energy provided by its stable of nuclear
reactors, the world's largest with 58 in France and 15 in the U.K.,
and its hydroelectric plants. Higher production lowers costs,
allowing the group financial elbow room for its expansion and its
investments.
EDF, which is 85%-owned by the French state, recently announced
a deal with the British government to build and operate for 35
years up to two new nuclear reactors in the U.K. The terms of the
deal are considered as extremely favorable for EDF, which obtained
a guaranteed price for the power it will produce there set at
GBP92.5 per gigawatt. The price also will be indexed to
inflation.
But the cost of building the new reactors are estimated at
around GBP14 billion or $22.5 billion, an amount EDF will share
with Chinese partners China General Nuclear Corp. and China
National Nuclear Corp., as well as French engineering firm Areva SA
(AREVA.FR). Yet, this will happen at a time the French group needs
to invest substantial amounts to expand the lifespan of its French
reactors and to increase their safety, due to stricter regulations
following the Fukushima nuclear disaster in March 2011.
Over the first nine months of the year, EDF's revenue grew 6.9%
to 55.16 billion euros, from EUR51.61 billion a year earlier,
matching expectations as 10 analysts polled by the company had
expected EUR55.14 billion.
EDF noted that at end September, it had saved around EUR800
million, as it initially planned to save EUR1 billion in costs this
year. It revised upwards its savings target for this year to EUR1.2
billion.
It also reiterated its financial targets for the year. It still
seeks a 3% organic growth at least in earnings before interest,
tax, depreciation and amortization, or Ebitda, excluding Edison,
while it still targets Edison's Ebitda at around EUR1 billion.
EDF recently clinched a deal over the ownership of energy maker
and supplier Dalkia with venture-partner Veolia Environnement SA
(VE, VIE.FR), granting it all of Dalkia's activities in France
while Veolia will retain the international businesses and pay
EUR550 million in cash to EDF.
Dalkia generates and distributes power for municipalities and
local services such as hospitals from small plants located close to
their customers. EDF and Veolia have been fighting over the control
of the much-profitable unit since 2011.
The group said the transaction is expected to improve its net
debt and net debt/Ebitda ratio: the impact in 2014 on net debt
should be positive by approximately EUR1 billion, including roughly
EUR400 million from the transaction and around EUR600 million from
the change in consolidation rules that go into effect on Jan. 1,
2014.
As for the Ebitda, the full-year impact is likely to be negative
by less than EUR100 million, "the unfavorable effect from end of
proportional consolidation of Dalkia International and Dalkia
Investissement being largely offset by the positive effect of the
transaction," it said.
The transaction is expected to be finalized mid-2014 at the
earliest.
-Write to Geraldine Amiel at geraldine.amiel@wsj.com
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