* Shares jump as much as 6.3 percent
* EDF sees flat EBITDA, investments flat at 12 bln euros
* EDF plans cuts of 1 bln euros in operating, capital
* No asset sales announced; Alpic stake under review
(Adds in 18 paragraph that France will take part of dividend in
By Geert De Clercq
PARIS, Feb 14 Shares in EDF, Europe's
No. 1 electricity producer, surged on Thursday after the French
utility unexpectedly increased its dividend increase, on the
back of a multi-billion euro government payout for renewables.
EDF also said it would cut 1 billion euros ($1.34 billion)
of costs, on top of a 2.5 billion cost-cutting programme begun
in 2011, to shave 5 percent off operating and capital
expenditure this year.
Like other European utilities, EDF faces falling demand due
to the weak economy in the region, and a drive for greater
energy efficiency. They are also burdened with big debts built
up through rapid expansion before the 2008 financial crisis.
"The year 2013 did not start well, and we are looking at how
to reduce our costs," EDF chief executive Henri Proglio said.
EDF expects stable core EBITDA earnings in 2013 amid
deteriorating business conditions and will keep its investment
outlay flat at 12 billion euros. Net profit in 2012 was up 5.3
percent to 3.3 billion, below consensus for a 9.77 percent rise.
Against analyst expectations, the firm did not announce
asset sales, but Proglio said that EDF was reviewing whether to
keep its 25 percent stake in Alpiq, which provides a
third of Swiss energy needs.
Proglio denied EDF was under pressure to sell assets to cut
debt, and said he did not like minority shareholdings.
"We like to control our own destiny," he said. Asked whether
Alpiq was a long-term investment, he said, "Probably not".
Analysts say a capital increase at Alpiq, which has a market
value of 2.4 billion euros, might be the catalyst for an EDF
exit, as a majority stake is out of reach.
"For political reasons, it is unlikely the other Alpiq
shareholders sell to the French," ZKB analyst Sven Bucher said.
EDF offered a 1.25 euro dividend, up from 1.15 euros and
above Thomson Reuters I/B/E/S consensus for a flat payout.
Shareholders can choose to receive the extra 10 cents in shares.
"Increasing the dividend despite the absence of any
certainty about future tariff-capex trends is either adventurous
or a very strong signal," a Paris-based trader said.
EDF said its closely watched net financial debt to EBITDA
ratio had fallen to 2.4 from 2.5 following the January agreement
on renewable energy subsidies under which EDF used 2.4 billion
euros out of a 4.9 billion payout to reduce its debt.
Pro forma net debt, taking into account the one-off
renewables refund, rose to 39.2 billion euros, above the 2011
level of 33.3 billion, but below a 42 billion consensus.
EDF shares rose 5.1 percent to 14.97 euros by 1524 GMT,
having hit 15.15 on the second highest volume since December.
EDF stock has underperformed, in part because the state,
which owns 84.4 percent of its shares, caps electricity prices
while demanding high dividends, pushing EDF deeper into debt.
"As a shareholder, the French state wants the highest
possible dividend. As a regulator, it wants to control
electricity tariffs," Proglio said.
The French state said it would exercise the option to take
10 cents of its dividend for each share in the form of new
shares in the utility.
Talks about tariffs are due over the next few months.
In 2011-2025, EDF needs to spend 55 billion euros to upgrade
its ageing nuclear fleet and EDF is keen to increase electricity
prices. It also hopes to extend the life span of its fleet to 60
years from 40.
"There must be a correlation between the level of investment
in plant renewal and plant lifetime," Proglio said.
In 2012, EDF invested 12 billion euros, of which 3 billion
euros on networks and 2.7 billion on nuclear maintenance.
Proglio said EDF is continuing talks with Britain about
setting an electricity sales price for its plan to build nuclear
plants after its partner Centrica pulled out.
He expects a deal by the end of the first quarter.
($1 = 0.7442 euros)
(Additional reporting by Benjamin Mallet, Christian Plumb,
Alexandre Boksenbaum-Granier, Ruppert Pretterklieber and Silke
Koltrowitz; Editing by Louise Ireland)