EDF shares jumped more than 10 per cent, their biggest rise since 2008, after the French utility company eased worries about its ability to finance nuclear projects, including Britain's Hinkley Point.
EDF surprised markets by cutting its dividend to €1.10 per share from €1.25. The French state, which has an 85 per cent stake, agreed to take its dividend in shares, saving the cash-strapped electricity producer €1.8 billion.
The firm also reaffirmed its forecast to return to positive cash flow after dividend payments by 2018, which many analysts had said would be difficult given the weight of EDF’s massive planned nuclear investments in France and Britain.
“We see the cut in dividend and capital expenditure, combined with further operating expenditure reductions as positive levers that will allow EDF to further optimise its balance sheet,” Bryan Garnier’s Xavier Caroen said in a note.
EDF shares – the worst performers in the Stoxx Europe Utilities index over the past 12 months with a 56 per cent slide - rose as much as 13 per cent, gaining more than €2.2 billion in market value in one of the biggest moves on the French stock market this year.
Nuclear reactors
Chief executive Jean-Bernard Levy said EDF was now “very close” to taking an investment decision on the £18 billion plan to build the two nuclear reactors in Britain.
EDF’s 2015 net profit for last year plunged some 68 per cent on asset impairments, but core profit was in line with expectations and the company said it remained committed to the Hinkley Point project in western England.
Asset impairments and provisions pushed EDF’s 2015 net income down to €1.19 billion from €3.7 billion last year. Non-recurring items cost €3.64 billion in 2015, compared to a cost of 1.15 billion the previous year.
The items concern impairments on thermal assets, notably in Britain, Italy, Poland and Belgium, and on Italian unit Edison’s exploration and production activities. They also include provisions for network renewal and nuclear waste storage.
– (Reuters)
