FRENCH power company EDF posted higher annual profits yesterday but disappointed investors with a profit forecast for this year that could prove over-optimistic due to de-regulation of the French market.
The former French monopoly is being forced to sell up to a quarter of its domestic nuclear output to competitors to help open up markets.
Traders said EDF’s 2011 profit target was based on a maximum price of €42 (£35) per megawatt hour (MWh) that the government could set for nuclear power production, which EDF will have to sell as part of a liberalisation law.
EDF posted a 4.4 per cent rise in 2010 earnings before interest, tax, depreciation and amortisation and forecast a rise of between four and six per cent this year.
The utility group said core earnings came in at €16.62bn last year – up from €15.93bn in 2009 and the €16.45bn average forecast.
Sales rose 10.2 per cent to €65.17bn in 2010, boosted by higher availability of EDF’s nuclear and hydro power capacity in France. This was despite an environment EDF described as difficult, with electricity and gas demand still not back to pre-crisis levels. Net profit fell to €1bn, and EDF’s debt fell to €34.4bn by 31 December, from €42.5bn at the end of 2009. It is expected to fall again to €27.1bn once the sale of a 45 per cent stake in Energie Baden-Wuerttemberg is effective.
City A.M. Reporter