EDF cuts dividend, says Hinkley Point decision soon

French EDF (EDF.PA) saw 2015 net profit plunge 68 percent on asset impairments and provisions and cut its dividend, but the power utility reaffirmed it was committed to its planned UK nuclear investment on which it will decide soon.

EDF CEO Jean-Bernard Levy told an earnings call that the investment decision on EDF’s 18 billion pound project to build two nuclear reactors in Hinkley Point, Britain 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 light of very low electricity wholesale market prices.

EDF surprised markets by cutting its dividend to 1.10 euros per share after paying 1.25 euros for three years in a row and against median consensus for an unchanged dividend.

Asset impairments and provisions pushed EDF’s 2015 net income down to 1.19 billion euros from 3.70 billion last year.

EDF said it had non-recurring items totalling minus 3.64 billion euros in 2015, compared to minus 1.15 billion last year.

These items mainly concern impairments on thermal assets, particularly in the United Kingdom, Italy, Poland and Belgium, and impairments on Italian unit Edison’s exploration and production activities.

The items also include provisions for network renewal and nuclear waste storage.

Levy also said the French state – which owns 85 percent of the company – would take its entire 2015 dividend in shares, which would leave 1.8 billion euros worth of cash with the company.

He declined to comment on press reports about a possible 5 billion euro capital increase.

“The share dividend is a de facto capital increase,” he said.

Levy also said that he hoped that the planned opening of the capital of its grid unit RTE can happen quickly. The government has said that state-owned bank CDC might take a stake in RTE.

The company confirmed its outlook for a positive cash flow after dividend payment by 2018.

EDF said 2015 core earnings before interest, tax, depreciation and amortisation (EBITDA) rose 1.9 percent to 17.6 billion euros and turnover rose 2.2 percent to 75.01 billion euros.

Reuters consensus estimates were for a median net profit of 1.36 billion euros (range 1.03-1.68), EBITDA of 17.41 billion (range 17.29-17.79), sales of 73.92 billion euros (range 72.40-76.33) and unchanged 1.25 euros dividend (range 0.80 to 1.34). EDF paid 1.25 euros on 2014, 2013 and 2012 earnings.

Nuclear power production totalled 416.8 terawatt/hour, compared to 415.9 TWh in 2014 and EDF’s own 2015 target of 410-415 TWh.



[Source:- Reauters]