State-controlled power utility Electricite de France cut its earnings outlook on expectations of lower nuclear output from an increase of plant outages, sending its share price down. EDF, which last week got the go-ahead from the British government to build the £18 billion ($23.4 billion) Hinkley Point nuclear plant in the U.K., said it expects earnings before interest, taxes, depreciation and amortization of between €16.3 billion ($18.3 billion) and €16.6 billion. It previously had forecast a range of €16.3 billion to €16.8 billion. The company had already lowered its nuclear output forecast in July, but had maintained its earnings target. The French power company said it was forced to close down its nuclear reactor for longer period that planned to carry out inspections after the country’s nuclear safety authority requested to conduct tests on the quality of the steel in the reactors’ vessels. The profit warning, which sent EDF’s shares down 1.8% to €10.62, is another blow for shareholders, who have seen the value of the company lose more than 20% this year. The utility, which already suffers from low electricity prices in its home country and losses of market share, has recently embarked on expensive new projects that are deemed a political priority. The French government, which owns about 85% of EDF, pressured the company to take a majority stake in beleaguered nuclear reactor manufacturer Areva NP. The government also pushed EDF to make the final investment decision to build the Hinkley Project in the U.K. Some senior EDF officials and labor unions worried about the project’s impact on the company’s net debt which already stood at €37 billion last year. One board member resigned over the issue in July as did Chief Financial Officer Thomas Piquemal in March. The U.K. government’s approval of the Hinkley Point project prompted Standard & Poor’s to downgrade EDF’s debt rating to A- on Wednesday evening, further pressuring the share price on Thursday morning.
Wall St Journal 22nd Sept 2016 read more »