Competition hits EDF sales, nuclear production target cut

PARIS (Reuters) - EDF EDF.PA on Tuesday reported a 6.7 percent fall in first-quarter sales due to increasing competition, record low wholesale power prices and mild winter weather.

The logo of France's state-owned electricity company EDF is seen next to the Electricite de France (EDF) thermal electricity production plant in Cordemais, France, April 21, 2016. REUTERS/Stephane Mahe/File Photo

In France, where the corporate and municipal power market was opened to competition at the start of the year, the energy company’s revenue fell more than 600 million euros to 12.1 billion euros (10 billion pounds), with 278 million due to higher competition, the rest to lower prices and warm weather.

Revenue in Britain fell 13.2 percent to 2.93 billion euros as the company lost market share.

“UK sales were penalised by mild weather and stiff competition, especially in the B2C (business to consumer)segment,” EDF chief financial officer Xavier Girre said on a call.

EDF also said it had reduced its target for 2016 nuclear output to 408-412 terawatt-hour from 410-415 TWh to take into account the extended duration of the outage of its Paluel 2 reactor in France, which was damaged by a falling steam generator during maintenance.

Girre said EDF would make a final investment decision on its Hinkley Point nuclear project in Britain after the company has consulted its works council but he gave no date. The French government has said a decision is due around September.

Girre said that he expected a decision on EDF’s credit rating by credit rating agencies in coming days. The company’s rating is currently on negative watch by both Standard & Poor’s and Moody’s.

He said he considered EDF’s action plan for cost cuts, asset sales, capital increase and scrip dividends were comprehensive and appropriate to finance the company’s investments even if its rating were to be downgraded.

Girre denied that EDF was planning an E.ON-style EONGn.DE spinoff of its nuclear division.

“We are not at all considering any kind of spinoff within the group, we are developing our strategy of being an integrated utility dedicated to low-carbon power,” he said.

Girre said EDF expected the French government to publish a multi-year energy investment plan by July 1 and said the company would decide on the possible extension of the life of its nuclear plants based on that plan.

The company confirmed its 2016 earnings guidance and maintained its ambition to achieve positive cash flow after dividends in 2018.

Reporting by Geert De Clercq. Editing by Jane Merriman; Editing by Bate Felix and Jane Merriman