PARIS (Reuters) - French energy utility EDF EDF.PA saw 2015 net profit plunge 68 percent on asset impairments and cut its dividend, but the state-controlled company said it remained committed to the UK nuclear power plant project at Hinkley Point.
Chief Executive Jean-Bernard Levy said the investment decision on the 18 billion-pound ($25.94 billion) project to build two nuclear reactors at Hinkley Point was “coming closer”.
He said EDF was negotiating final details with its Chinese partner and was looking at how best to finance the operation in the light of low electricity prices.
EDF surprised analysts on Tuesday by cutting its dividend to 1.10 euros per share after paying 1.25 euros three years in a row, with the consensus forecast being for the dividend to be maintained at 1.25 euros.
Despite this EDF’s shares opened 5 percent higher at 10.8 euros as analysts said the market saw the dividend cut and option for shareholders to take the dividend in shares as a boost to EDF’s stretched finances.
Bryan Garnier’s Xavier Caroen said the dividend cut was a surprise, coming a year sooner than expected, but noted that the operating performance was good, despite the impairments.
“We see the cut in dividend and in capital expenditure, combined with further operating expenditure reductions as positive levers that will allow the group to further optimise its balance sheet,” Caroen said in a note.
Asset impairments and provisions pushed EDF’s 2015 net income down to 1.19 billion euros from 3.7 billion last year. Non-recurring items totalled minus 3.64 billion euros in 2015, compared to minus 1.15 billion last year.
The items concern impairments on thermal assets, notably in the UK, Italy, Poland and Belgium, and on Italian unit Edison’s exploration and production activities. They also include provisions for network renewal and nuclear waste storage.
Levy also said the state - which owns 85 percent of EDF - would take its dividend for 2015 in shares, which would leave 1.8 billion euros worth of cash in EDF.
He declined to comment on a possible capital increase. “The share dividend is a de facto capital increase,” he said.
Levy said that he hoped the opening of the capital of its French grid operating unit Reseau de Transport d’Electricite (RTE) can happen quickly. The government has said state-owned bank CDC might take a stake in RTE.
EDF reaffirmed its forecast for a positive cash flow after dividend payments by 2018.
EDF’s 2015 core earnings rose 1.9 percent to 17.6 billion euros on turnover up 2.2 percent at 75.01 billion euros.
Editing by Alister Doyle, Greg Mahlich
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