British Energy Beats Profit Estimates, Reactor Repairs on Plan

By Paul Dobson

Aug. 13 (Bloomberg) -- British Energy Group Plc, the nuclear power producer that rejected a bid from Electricite de France SA, reported better-than-expected profit for the first quarter and said reactor repairs are proceeding to plan.

Earnings before interest, tax, depreciation and amortization for the three months through June fell 49 percent to 129 million pounds ($245 million), beating the 88.5 million- pound median estimate of four analysts surveyed by Bloomberg. The company sold output from its atomic and coal-fed plants at higher prices.

Production was crimped by the closure of the Heysham-1 and Hartlepool plants late last year because of corroded wires. The repairs are on schedule, Chief Executive Officer Bill Coley said on a conference call today. He declined to comment on the takeover offer.

East Kilbride, Scotland-based British Energy spurned a 12 billion-pound bid from Electricite de France on Aug. 1, two people with knowledge of the talks said. Rivals want to buy the utility to capture rising U.K. electricity prices and build reactors adjacent to its eight existing nuclear plants. It left the door open for more talks after U.K. Business Secretary John Hutton backed the French utility's approach.

British Energy rose as much as 10 pence, or 1.4 percent, to 715 pence in London trading and was at 710 pence as of 8:09 a.m. local time.

Lower Output

Net income for the three months through June fell to 62 million pounds from 179 million pounds a year ago, the company said today in a statement. Its reactors produced 27 percent less power in the quarter compared with the year-earlier period.

``We have been able to benefit from the higher power prices prevailing during the period through the sales of previously uncontracted volumes,'' and wider profit margins from the coal- fired Eggborough power plant, the company said.

It revised up cost estimates for repairs to the Heysham-1 and Hartlepool reactors to 115 million pounds from 50 million pounds and said it plans to start all four reactors in the third quarter of its financial year, the three months from October.

The U.K. government, which owns 35.6 percent of British Energy, supports the building of new reactors that will replace older plants without increasing carbon-dioxide emissions. The U.K. said it was disappointed by the failure to reach a deal with Paris-based Electricite de France. There was a big difference between the offer price and the price some shareholders wanted, Hutton said.

Centrica Plc, the U.K.'s biggest electricity and gas supplier, has said it would consider merging with British Energy should its attempt to acquire a minority stake in the nuclear power producer fail.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net