EDF Net Drops 12% After Last Year's Accounting Gain

By Tara Patel

Aug. 1 (Bloomberg) -- Electricite de France SA, Europe's biggest power generator, said profit fell 12 percent in the first half after last year's earnings were boosted by accounting gains from power distribution assets.

Net income declined to 3.09 billion euros ($4.8 billion) from 3.51 billion euros a year earlier, the Paris-based operator of France's 58 nuclear power plants said today in an e-mailed statement. That was in line with the 3.13 billion-euro median estimate of seven analysts surveyed by Bloomberg News.

The earnings come just as the state-controlled utility, which is the world's largest owner of nuclear power stations, backed away from a proposed bid for British Energy Group Plc, saying circumstances are not in place for expansion in the U.K.

Earnings before interest, tax, depreciation and amortization increased to 9.04 billion euros from 8.87 billion euros in the previous year, higher than the median forecast of 8.99 billion euros. Calling the first half ``better than expected,'' the company raised its outlook for the year.

``The results are too mixed to be well-liked by the market,'' Patrice Lambert de Diesbach, Paris-based analyst at CM-CIC Securities, said in a note to clients today, citing disappointing earnings in Italy and strong results in the U.K.

Electricite de France has said an increase in fuel and equipment costs, as well as repairs on faults at some power plants, would crimp growth in operating profit this year.

`Solid Performances'

``Against a difficult backdrop of cost pressures, the group released solid performances,'' Chief Executive Officer Pierre Gadonneix said in the statement.

Electricite de France said its target for Ebitda organic growth is around 3 percent for the year while net income excluding non-recurring items ``may not increase.''

The company had said earlier Ebitda growth would be less than 3 percent this year, breaking with targets set for Ebitda growth of between 3 percent and 6 percent.

First-half revenue rose 6.4 percent to 32.2 billion euros with sales in the domestic market rising 8 percent to 17.8 billion euros, driven by higher volumes, which meant the utility was able to sell less wholesale power. Ebitda in France rose a ``moderate'' 1.3 percent because of more energy and fuel purchases and higher costs for pensions and maintenance, the statement said.

The utilization rate of the utility's reactors was 80.2 percent last year compared with 83.6 percent in 2006, the company has said. The utility is aiming to raise the rate to 85 percent during the next three or four years.

Repairs to stream generators at 16 reactors will shave 2 percent off overall availability this year and next, Chief Operating Officer Jean-Louis Mathias has said.

To contact the reporter on this story: Tara Patel in Paris tpatel2@bloomberg.net