EDF faces 32 bln euro earnings hit from lower nuclear output

Power company EDF annual results in Paris
The logo of Electricite de France (EDF) is seen during a news conference to present the 2021 annual results of State-controlled French power company EDF in Paris, France, February 18, 2022. REUTERS/Gonzalo Fuentes

PARIS, Oct 27 (Reuters) - EDF (EDF.PA) is expecting a hit of around 32 billion euros ($32.18 billion) to its full-year core earnings from lower nuclear production, which is a bigger loss than previously estimated and its sixth profit warning this year.

EDF has been struggling all year with an unprecedented number of outages at its 56-strong fleet of reactors, partly due to corrosion issues detected in December 2021.

Those problems have been compounded by strikes over wages in the past few weeks that further delayed repair works at some reactors.

The group, which is in the process of being fully nationalised, confirmed nuclear output would come in at the lower end of a previously announced 280-300 terawatt-hours range - a 30-year low.

In September, EDF had forecast a hit to its earnings of 29 billion euros due to lower production.

The company also expects that a government electricity price cap introduced earlier this year to protect French households from soaring energy prices will cost it a further 10 billion euros as it was forced to sell electricity at a discount to its competitors.

The combination of lower output and capped electricity prices means EDF is set to end the year with a big loss. The company's core earnings or EBITDA in 2021 came in at 18 billion euros.

The government has put pressure on EDF to get its nuclear fleet ready in time for the winter just as Europe scrambles to replace Russian gas, even though unusually mild weather in recent weeks has offered a temporary respite.

The strikes at its reactors ended last week and the group, which has more than 40 billion euros of debt, said on Thursday it was still assessing their impact.

In its statement on Thursday, the group said it had completed repair works on six reactors affected by corrosion problems, while works were still under way at four reactors for the same issues and five more were being checked.

EDF is also about to get a new CEO. The French parliament this week approved President Emmanuel Macron's proposal to appoint Luc Remont, currently a top executive at Schneider Electric, to take over the helm of the company. Finance Minister Bruno Le Maire said on Thursday he wanted Remont to start in his new role in mid-November.


Separately, the French government on Thursday announced it will next year require the utility EDF to sell less of its nuclear power at prices set by the regulator to smaller rivals than it did in 2022.

EDF will be required to sell 100 terrawatt-hours (TWH) to rivals at what is known as the Arenh price - a tariff well under market level and even EDF's production costs which had been weighing on its profits - compared with 120 TWH this year.

The state, which already owns 84% of EDF, is due to launch a buyout offer for the shares it does not already own by the end of this year, in a deal worth almost 10 billion euros.

EDF's board late on Thursday gave its nod to the offer and advised minority shareholders to take the deal.

Citing an independent expert overseeing the takeover proceedings, the company said the price of 12 euros a share was fair.

This would even remain the case in the event that a lawsuit brought by EDF against the state for having forced it to sell more cheap power to rivals than initially planned this year, results in financial compensation.

($1 = 0.9945 euros)

Reporting by Benjamin Mallet and Silvia Aloisi; Editing by Sudip Kar-Gupta, Jan Harvey, Jane Merriman and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.