July 30, 2020 / 7:35 AM / 12 days ago

French utility EDF plans cost cuts, more asset sales

PARIS (Reuters) - French utility EDF (EDF.PA) plans to cut operating costs by 500 million euros up to 2022 and aims to generate 3 billion from asset sales after reporting a fall in net profit in the first half of 2020 due to the coronavirus outbreak.

The company said on Thursday it planned the asset sales over the period 2020 to 2022 and would keep its net investments stable at around 15 billion euros on average annually until 2022.

CEO Jean-Bernard Levy told analysts: “I’m confident that EDF will be able to achieve the additional targets.”

EDF has recently completed a 10 billion euro asset sale programme.

The company’s net income was down 9.6% to 1.3 billion euros in the six months to June, while sales fell during the period by 4.9% to 34.7 billion euros.

“Despite the economic downturn, the impact of the crisis on our main financial indicators remains contained, attesting to the resilience of our group,” the CEO said in a statement.

EDF’s earnings before interest, taxes, depreciation and amortisation (EBITDA) took a 1 billion euros (906.93 million pounds) hit as of the end of June 2020, mainly due to lower nuclear output, a drop in demand and postponement of work and service activities.

Core earning for the first half of the year were down 1.6% at 8.2 billion euros.

EDF, which withdrew its 2020 and 2021 financial targets in April due to the turmoil caused by the pandemic, said it now expected its EBITDA for 2020 at between 15.2 billion euros and 15.7 billon euros.

Analysts at Jefferies, which has a “buy” rating on EDF, said the target was in line with market expectations.

EDF’s shares rose 3% in early trade.

The utility raised its French nuclear power generation forecast for 2020 to between 315 terrawatt hours (TWh) and 325 TWh, from 300 TWh estimated in April.

EDF said construction activities were temporarily interrupted between mid-March and early May at its Flamanville 3 EPR nuclear reactor being built in the north of France. This could result in further delays and additional costs, it said.

Reporting by Bate Felix; Editing by Shri Navaratnam/Edmund Blair/Jane Merriman

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