EDF Profit Falls on Lower Electricity Prices, Deregulation

PARIS—French state-controlled power utility É lectricité de France SA said first-half profit fell as a result of lower electricity prices in its home country and losses of market share related to the deregulation of the country's market.

Net profit dropped 17% to €2.08 billion ($2.31 billion), while revenue fell 5.7% to €36.66 billion, EDF reported on Friday. Earnings before interests, taxes, depreciation and amortization fell 2.2% to €8.94 billion.

The net profit was lower than the €2.27 billion forecast by Cosma Panzacchi from Bernstein Research.

EDF Chief Executive Jean-Bernard Lé vy attributed the decline to a drop in electricity prices on the wholesale market and a loss of nearly 25% of a category of customers—small businesses and public institution customers—who were allowed in recent months to switch from the former monopoly to rival operators.

Separately, the company said it would extend the depreciation of its fleet of 900 megawatt reactors in France to 50 years instead of 40 years.

EDF is in the process of raising €4 billion in fresh equity as the utility needs to embark on expensive new projects deemed political priorities. The government will inject €3 billion in the capital increase.

EDF plans massive investments in the coming years, including the acquisition of a controlling stake in Areva's nuclear reactor unit and an 18 billion-pound ($23.7 billion) plan to build nuclear reactors in the U.K.

The company has said it would cut costs and sell assets to raise additional cash to finance the investments.

On Thursday it announced it had opened exclusive talks with French state-financial house Caisse des Dé pô ts et Consignations and French insurance company CNP Assurances SA to sell them a 49.9% stake in its grid operator RTE in a deal that would value RTE at €8.45 billion.

Write to Inti Landauro at [e-mail]

(END) Dow Jones Newswires

July 29, 2016 04:05 ET (08:05 GMT)

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