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A fall in electricity prices and technical issues at some nuclear plants led EDF to report a drop in core full-year earnings for 2016, although the French state-controlled utility confirmed its outlook for positive cash flow in 2018.
Earnings before interest, tax, depreciation and amortisation fell 6.7 per cent to €16.41bn while revenues fell 5.1 percent to €71.2bn. Net income excluding non-recurring items fell 15 per cent to €4.09bn.
Jean-Bernard Lévy, the chief executive and chairman of EDF, said that the group’s “fundamentals are robust” and promised to continue to expand outside Europe with new projects in 2017.
EDF has been hit by lower energy prices across Europe, which are linked to the value of crude oil. Meanwhile, the opening up of the French market to competition has eroded EDF’s once near-monopoly status.
The company is cutting jobs and spending, and plans to sell €4bn of new shares this quarter in order to manage this rocky period. Around €3bn worth of these shares will come from the French government.
EDF is also divesting €10bn of assets by 2020 to ease its large debt load debt – which was stable in 2016 at €37.4bn – and finance projects such as a the new £18bn Hinkley Point nuclear project in the UK.
In France, EDF said it was affected by a decline in nuclear output, mainly due to outages and the extension of outages related to additional tests conducted by the French nuclear safety authority.
Regulators last year ordered a halt to operations at 18 plants for a short time after the discovery of high carbon levels in components made by some suppliers. All but one of the plants have since been allowed to restart.
EDF benefited from lower impairment losses in 2016 as well as the positive effect of the extension to 50 years of the accounting depreciation period of its nuclear fleet. This meant that net income rose 140 per cent to €2.85bn over the year.