EDF Reports Group Sales at 30 September 2009: €48.3 billion, +6.7%
Thursday, November 12, 2009
- Growth in International and Other Activities: +13%
- Group Organic growth: +2.9%
Group’s sales continued to grow thanks to the buoyant International activities, which benefited from a substantial contribution of British Energy (€2.5 billion). Sales in the United Kingdom increased by 44.3%, and by 12.1% on an organic basis. Further strong performances by EDF Trading, EDF Energies Nouvelles and EDF subsidiaries in Poland also contributed to growth of Group’s sales.
Total Group sales for the first nine months of 2009, up 6.7%, include €2.7 billion from changes in the scope of consolidation, mainly linked to the acquisition of British Energy, and an adverse impact from exchange-rate fluctuations of €1 billion resulting from the strengthening of the euro, particularly against the sterling pound. Excluding the effects of the various changes to the scope of consolidation and exchange-rate impacts, organic sales grew by €1.3 billion or 2.9%.
International and Other Activities
Third-quarter trends in the International and Other Activities businesses continued to underpin Group’s performance. International and Other Activities sales advanced by 13%, and by 4.7% on an organic basis. They accounted for 49% of Group’s sales.
In the United Kingdom, sales stood at €8.3 billion, up 44.3% and 12.1% on an organic basis. British Energy made a contribution of €2.5 billion to nine-month Group’s sales, with nuclear generation amounting to 42 TWh (+40% compared with the same period in 2008).
EDF Energy’s generation (excluding nuclear) and supply activities grew, thanks especially to a favourable price effect in electricity sales to industrial customers, the impact of 2008 tariff increases and market share gains. Network activities sales edged down (-2%) due to lower volumes delivered and a decline in external work sales, reflecting the general economic slowdown.
In Germany, EnBW contributed €5.4 billion to Group sales, up 1.1% and 0.3% on an organic basis. EnBW’s electricity sales edged down 1.3% on an organic basis, due to a fall of 7.5 TWh in volumes sold, particularly to industrial customers, whose consumption was affected by the economic crisis. This decrease in volumes sold was offset by a positive price effect.
Gas sales advanced by 8% thanks to a favourable price effect, especially with industrial customers. The agreements signed by EDF, EnBW and E.ON on 1 October 2009 (see Significant Events in the appendices) gave EnBW access to 1,740 MW of additional generation capacity in Germany, including capacity already acquired from E.ON in May 2009 (445 MW in Lippendorf and 79 MW in Bexbach). This transaction significantly bolstered its generation portfolio and helped to achieve a better balance with its supply business in Europe’s largest energy market. In return, E.ON acquires drawing rights of 800 MW of nuclear power in France based on EnBW’s historic drawing rights from EDF’s nuclear generation.
In Italy, Group sales totalled €3.6 billion, down 10.3% and down 9.3% on an organic basis. Edison made a contribution to EDF Group sales of €3.2 billion, down 9.1% and down 8.5% on an organic basis.
Edison’s electricity activities were down due to a fall in prices and volumes sold on the IPEX market attributable to the economic downturn, although this was partially offset by the successful development of sales to end users. Natural gas sales to end users continued to grow, driven by increased volumes sold to residential customers on the back of colder-than-usual weather in the first quarter of 2009, and by a positive price effect on natural gas. Fenice’s sales fell due to the downturn in the automotive industry.
The Other International segment posted sales of €2.3 billion, up 5.3% and 13.2% on an organic basis, driven in particular by a positive price effect in Poland stemming from electricity sales under contracts signed in 2008.
The Group’s Other Activities segment contributed €4 billion, up 11.4% and 9.6% on an organic basis, thanks in particular to growth by EDF Trading, EDF Energies Nouvelles and Dalkia International in Central and Eastern Europe.
In France, sales totalled €24.8 billion, up 1.3%, with electricity activities virtually flat and increasing natural gas and services activities.
In electricity, nuclear and hydroelectric output declined by 19 TWh, mainly attributable to the knock-on effects of strikes during the Spring term as well as to the reduced hydroelectricity output in the third quarter of 2009 (-2 TWh). Besides, electricity end-customer demand declined by 8 TWh. Indeed, lower demand from industrial and business customers (-12 TWh, of which -8 TWh related to the economic downturn) was partly offset by a 4 TWh increase in residential demand. The Group was a net buyer of power of 13 TWh on the wholesale markets. The distribution and transmission activities benefited from the positive impact of colder weather conditions in early 2009 on volumes delivered. The sales of distribution and transmission activities, which benefited from a tariff increase effective only since the first of August 1st, have declined, excluding climate, mainly as a result of the economic slowdown.
As of 30 September 2009, trends in Group operating performance were progressing in line with results objectives previously announced by the Group for the full year of 2009. Good performance in International and Other Activities were bolstering organic growth of Group’s EBITDA. Those evolutions were offsetting the lower French performance, impacted in particular by the storms in the beginning of the year, the effects on nuclear output of the strikes during Spring time and a moderate increase in tariffs in August 2009 against a backdrop of tension on operational expenses.
During Q4 2009, and in particular since the end of October, the nuclear fleet in France experienced several unplanned outages, linked in particular to some equipments (steam generators, alternators), whose replacement was necessary and already planned in part as soon as in 2010. These outages, which affect the objective of the improvement of the nuclear fleet this year, are now leading to expect a nuclear output of around 390 TWh in 2009. However, since the successful integration of British Energy, reported Group EBITDA should grow
significantly compared to 2008. At constant scope and exchange rates, Group's EBITDA should be, with standard Winter climate conditions, close to that achieved in 2008, excluding the TaRTAM effect, owing to the lower nuclear output at year-end.
Reported Net income (Group share) should increase significantly compared to 2008. Net income from ordinary operations, which was down in H1 2009, should decline further in the full financial year, owing mainly to lower nuclear output at year-end.
EDF Group confirms its target of maintaining a strong debt rating, with an EBITDA/debt ratio within a 2.5-3 times range, before the expected improvement of ratios as a result of the announced disposal programme.
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