French energy giant EDF has cut its earnings targets for next year due to falling electricity consumption and a decline in the availability of nuclear reactors.
Shares in the Euronext Paris-listed company tumbled almost nine per cent in morning trading, after it said the group will face “several unfavourable developments”, which include the “expected erosion” of electricity consumption in France and a lower availability of some nuclear reactors at the beginning of 2018. Analysts at Jefferies recently estimated that without “critical” life extensions to France’s nuclear reactors, French nuclear capacity will decline rapidly from 63GW in 2017 to 14GW in 2030, although they noted the country’s government has begun to take note of the situation.
Another factor that may hinder EDF over the next 12 months is a potential drop in the capacity compensation in the United Kingdom.
EDF also said net investments should reach close to €11bn (£9.8bn) next year, compared to an initial target of €10.5bn. The firm said: “This amount includes an acceleration of investments in renewable energies and the necessary investments on the French nuclear fleet and the distribution network.”
The French state-owned group also confirmed a “significant rebound” in earnings before interest, taxation, depreciation and amortisation (Ebitda) in 2018, “driven notably by the expected increase in nuclear and hydro output in France, the rise in wholesale power prices in Europe and the good execution of the Opex performance plan”.
However, the expectation for Ebitda has been reduced to between €14.6bn and €15.3bn, from a previous target of at least €15.2bn.
Earlier this year, EDF shares fell to an all-time low when the company launched a €4bn capital raising to support investments such as the UK’s Hinkley Point nuclear project.