EDF faces 32 billion euro earnings hit from lower nuclear output

EDF (EPA:EDF) is expecting a hit of around 32 billion euros ($32.18 billion) to its full-year core earnings from lower nuclear production, a bigger loss than previously estimated and its sixth profit warning this year.

EDF has been struggling all year with an unprecedented number of outages at its 56-strong fleet of reactors, partly due to corrosion issues first detected in December 2021.

Those problems have been compounded by strikes over wages in the past few weeks that further delayed repair works at some reactors.

The group, which is in the process of being fully nationalised, confirmed nuclear output would come in at the lower end of a previously announced 280-300 terawatt-hours range – a 30-year low.

In September, EDF had forecast a hit to its earnings of 29 billion euros due to lower production.

The company also expects that a government electricity price cap introduced earlier this year to protect French households from soaring energy prices will cost it a further 10 billion euros as it was forced to sell electricity at a discount to its competitors.

The combination of lower output and capped electricity prices means EDF is set to end the year with a big loss. The company’s core earnings or EBITDA in 2021 came in at 18 billion euros.

The government has put pressure on EDF to get its nuclear fleet ready in time for the winter just as Europe scrambles to replace Russian gas, even though unusually mild weather in recent weeks has offered a temporary respite.

The strikes at its reactors ended last week and the group, which has more than 40 billion euros of debt, said on Thursday it was still assessing their impact.

In its statement on Thursday, the group said it had completed repair works on six reactors affected by corrosion problems, while works were still underway at four reactors for the same issues, while five more were being checked.

EDF is also about to get a new CEO. The French parliament this week approved President Emmanuel Macron’s proposal to appoint Luc Remont, currently a top executive at Schneider Electric (EPA:SCHN), to take over the helm of the company. Finance Minister Bruno Le Maire said on Thursday he wanted Remont to start in his new role in mid-November.

The state, which already owns 84% of EDF, is due to launch a buyout offer for the shares it does not already own by the end of this year, in a deal worth almost 10 billion euros.

($1 = 0.9945 euros)