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EDF issues fourth profit warning as nuclear output drops

·2-min read
FILE PHOTO: A flag with the EDF logo flies next to the EDF power plant in Bouchain

By Benjamin Mallet and Silvia Aloisi

PARIS (Reuters) -French power company EDF , which is being nationalised, issued its fourth profit warning of the year on Thursday as it fell to a loss in the first half on lower nuclear output.

Half its 56 nuclear reactors are currently offline due to planned maintenance and work to repair corrosion just as Europe faces an energy crisis.

EDF said on Thursday it now expects reduced electricity output to lower its 2022 core earnings by 24 billion euros ($24.5 billion), upping a forecast of 18.5 billion made just two months ago.

Nuclear output in France fell by 15% in the first six months of the year, while drought and unusually low river levels meant hydroelectricity production declined by 23%.

EDF's finances have also been strained by a power tariff cap imposed by the government to shield consumers from soaring energy prices.

EDF says the cap is costing it a further 10 billion euros. The measure has forced EDF to buy electricity on the market at record high prices and sell it cheaply to competitors.

The group, which has more than 40 billion euros of debt, said in a statement the war in Ukraine had led to "extreme tensions in the electricity market in a context of lower nuclear output in 2022, requiring significant purchases on the market".

CEO Jean-Bernard Levy, who is being replaced by the government, said electricity prices were "unbelievably high" and swinging wildly on a daily basis.

EDF booked a net loss of 5.29 billion euros in the first half after a profit of 4.17 billion a year earlier. Sales rose to 66.2 billion euros from just under 40 billion a year earlier.

Core earnings (EBITDA) are expected to be "significantly lower" in the second half of the year, the group's finance chief told analysts on a conference call.

The government, which already owns 84% of EDF, announced this month it would take full control of the group to help it fund massive investment to fix its reactors and build new ones.

France has said EDF's nationalisation, which will cost the state 9.7 billion euros, will increase the security of its energy reserves as Europe scrambles to find alternatives to Russian gas.

The governments plans to launch the process in early September, with a public tender to buy out minority shareholders and delist the group expected to be completed by November.

Rising prices have squeezed energy suppliers across Europe, with Uniper, Germany's biggest importer of Russian gas, requiring a 15-billion euro state bailout.

($1 = 0.9795 euros)

(Editing by Mark Potter and Jason Neely)

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