(Boursier.com) — If this is not the worst-case scenario, it looks very much like it… And inevitably, the title EDF suffers this Friday. Falling by nearly 25% at the opening of the Paris market, the action is trying to limit its losses, even if the decline is still very marked, at more than 15%… The government has announced an increase in the volume of nuclear electricity sold at a reduced price by the national electrician to its competitors, in order to limit the increase in regulated electricity tariffs (TRV) to 4% on 1 February. A measure that should impact EDF’s 2022 operating profit (Ebitda) by around 8.4 billion euros based on market prices as of December 31, 2021 (7.7 billion as of January 12, 2022).
While waiting to know the final impact of these measures based on market prices, the group has withdrawn its 2022 outlook on its Ebitda and its net financial debt.
To make matters worse, EDF has lowered its estimate of nuclear production for this year to 300 – 330 TWh, against 330 – 360 TWh previously. This revision results from the extension of the outage period of 5 reactors in EDF’s French nuclear fleet after the discovery of defects near welds in the safety injection circuit (RIS) pipes. ” The development of the inspection program for the entire nuclear fleet is continuing, gradually integrating the lessons learned from the first appraisals carried out. The impact on EDF’s financial outlook is currently being analyzed. “, specified EDF.
“This is the worst case scenario,” Bernstein analysts write. There are now two cases where EDF has to buy volumes at high prices, one of which is driven by politics. There is ‘hope that reason will prevail’ and that there is a political turnaround once the impacts on EDF and the company’s predicament, including outages and balance sheet strain, become apparent . Bernstein also notes that political intervention is “diametrically opposed” to the French government’s medium-term goals of steering EDF into calmer waters with a strong track record for making green investments and creating a positive story around nuclear ahead of nuclear decisions. build new reactors.
Oddo BHF notes for its part that the final impact on EDF’s EBITDA remains very volatile since it will depend on the evolution of market prices. Unfortunately, since EDF is now officially a net buyer of electricity for significant volumes, it is likely that these will be under upward pressure, at least in the short term. Given the high volatility, the group undertakes to communicate regularly on the evolution of this estimate. In the meantime, the ND/EBITDA guidance of around 3x is suspended for 2022. The analyst has adjusted its model to retain these two significant elements over the year and at this stage expects EBITDA of around 10 billion euros in 2022. he impact on cash flows as well as the strong uncertainty around these estimates given their sensitivity to the market price leads it to downgrade its recommendation on the value to ‘neutral’ with a target of 11 euros.
“Given the circumstances, EDF is likely to consider a capital increase”, finally asserts Vincent Ayral, analyst at JPMorgan Chase & Co. “We recommend avoiding the title for the moment”.
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