EDF Sees Lighter Earnings Impact From Price Cap, Falling Output

(Bloomberg) --

Electricite de France SA dialed back a profit warning from March as it trimmed its estimate for the cost of falling nuclear output.

The move is a surprise, as data from France's grid operator showed this week that national nuclear production tumbled last month, while soaring power prices have hurt EDF, which has to buy back the output shortfall on the market. A government cap on electricity prices for consumers also limits EDF's income.

The impact of lower nuclear production and the price cap will trim earnings before interest, taxes, depreciation and amortization by 24 billion euros ($25.2 billion) this year, the state-controlled company said Wednesday in a presentation on its website. That compares with a hit of 26.2 billion euros forecast in mid-March.

First-quarter revenue jumped 61%, EDF said in a statement. It reiterated that rising energy bills should have a positive impact on earnings of about 6 billion euros this year, while the decline in nuclear output will hurt Ebitda “due to the necessary buybacks of electricity on the wholesale markets.”

Challenges for the debt-laden utility are such that President Emmanuel Macron suggested in March that some of its key activities could be nationalized as part of a broader plan to bolster the country's energy independence.

The energy-market chaos exacerbated by Russia's invasion of Ukraine has given fresh impetus to France's long-mooted push to restructure its biggest power supplier, which had to carry out an emergency share sale last month to limit a downgrade by credit rating firms.

Macron wants to negotiate power-market reforms with the European Union to help EDF build new atomic plants while reining in electricity prices for consumers.