EDF H1 profit nearly doubles on Brazilian sale gain
Friday, September 1, 2006, 12:54
Electricite de France SA, Europe's largest utility by market value, said H1 profit nearly doubled after it sold a Brazilian unit and higher German and British sales offset costs from producing power during a drought. The operator of France's 58 nuclear power plants said net income rose to € 4.14 billion ($5.3 billion) from € 2.13 billion a year earlier, EDF said in an e-mailed statement. Excluding one-time items, profit rose 41% to € 2.92 billion from € 2.08 billion. Analysts expected net income of € 2.43 billion, according to the median estimate of nine surveyed by Bloomberg. France's former power monopoly warned in May that H1 earnings would be hurt by higher fuel costs and dry weather, which has cut some hydro and nuclear production. The Paris-based company on Aug. 4 said H1 sales rose 21% to € 30.4 billion, led by increases in the UK, Germany and Italy. „We know that revenues were strong,” said Ingo Becker, an analyst at Kepler Equities in Frankfurt with a „buy” rating on the shares, before the release. Becker expected profit of € 2.24 billion, the lowest in Bloomberg's survey, partly because of lower hydro-power generation. EDF reported € 1.2 billion in one-time gains, including about € 1 billion from the sale of a majority stake in Rio de Janeiro power distributor Light Servicos de Electricidade. While the worst of the heat wave that struck Europe this summer occurred after the earnings period, the first six months were drier than normal in France. Drought crimps output at dams and at nuclear reactors, where water is used for cooling. Electricite de France has installed hydropower capacity of about 20,000 megawatts, or 16% of its total 125,000 megawatts, with more than 400 plants, according to its annual report. CEO Pierre Gadonneix on July 19 said power supplies were in „crisis” because of the heat. The company was forced to buy electricity to satisfy demand it couldn't meet with its own production.
The results come after Electricite de France won a 1.7% increase, starting Aug. 15, for regulated power prices in France, where the company has four times the sales it has in Britain, the utility's next-largest market. Its UK unit, which supplies about a quarter of the country's power needs, in July said it would raise household prices 8%. French Finance Minister Thierry Breton said on July 7 the government is ready to consider allowing some companies that buy electricity on the unregulated market to revert to regulated prices because they are struggling to cope with rising power costs. The measure will be discussed in France's parliament as part of an energy bill required to allow state-controlled Gaz de France SA to merge with Suez SA. State-controlled Electricite de France in May said earnings before interest, tax, depreciation and amortization will grow between 3% and 6% a year for the next three years. The state of France in November sold 13% of EDF and retains an 86% stake. The company's shares have risen 40% this year, the second-best performance in the 19-member Bloomberg Europe Electric Index, trailing only North Yorkshire, UK-based Drax Group Plc. The index has climbed 17% in the period. EDF's € 2 billion of 5% bonds maturing in 2009 dropped to 102.88 cents on the euro on Aug. 30 from 105.60 on the euro at the end of 2005, according to prices from RBC Capital Markets Ltd. The bond's yield was 3.71%, up from 3.06% at the end of 2005, according to RBC. (Bloomberg)