Black Friday for EDF on the stock market

In order to limit the rise in electricity prices for consumers, the French government on Thursday asked EDF to increase by 20% the volume of nuclear electricity sold at a reduced price to its competitors this year, from 100 to 120 terawatt hours. (TWh).

This means that the group will be forced to sell at a reduced price up to -40% of its electricity production in 2022, instead of selling at high market prices. This decision will cost him billions of euros.

In financial terms, the group announced Thursday evening that “in the current state of the information” available to it, the impact of this measure on its gross operating surplus for 2022 would be “around 8.4 billion euros. euros based on market prices as of December 31, 2021 and approximately €7.7 billion based on market prices as of January 12, 2022”.

Figures “which can scare investors”, say Alphavalue analysts in a note on Friday.

But “the real bad news” concerns the “downward revision of nuclear production” for 2022 to 300/330 TWh, against 330/360 TWh previously, due to the extension of the shutdown period of five nuclear reactors. French from EDF, they point out.

Today, 10 of the 56 reactors are shut down for maintenance or other, which represents 20% of French nuclear production capacity. Other plant closures, in the middle of winter when electricity consumption is high, could disrupt the country’s electricity supply, or even create power cuts in the worst case.

Thursday, the Institute for Radiation Protection and Nuclear Safety (IRSN) told AFP that a nuclear reactor at the Penly power plant (Seine-Maritime) was also affected by a corrosion problem on a security system already detected. or suspected on four other EDF reactors currently shut down.

This news is all the more “alarming since Penly is designed differently than (the reactors of) Civeaux and Chooz and the corrosion problems do not seem to be attributable only to a certain type of reactor”, according to the note from Alphavalue.

This announcement “opens the way to potential additional interruptions in the coming weeks and months (…) and the impact on the financial results is difficult to estimate at this time since it will depend on the duration of the interruptions and the their number”, it is added.

“We are also concerned about the structure of the results, a capital increase/issue of hybrid securities cannot be ruled out”, conclude the analysts at Alphavalue.

“We have adjusted our model to retain these two significant elements over the year and at this stage, we expect Ebitda of around 10 billion euros in 2022”, estimate for their part the analysts of Oddo BHF. On November 10, EDF published an EBITDA forecast of more than 17.7 billion euros for 2021. The annual results are expected on February 18.

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