Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on EDF. We currently have 17 research reports from 1 professional analysts.
Frequency of research reports
Research reports on
Profit warning on 2017 earnings
15 Dec 16
After a Board of Directors meeting held on 14 December 2016, EDF has issued another profit warning, now expected on its 2017 earnings. Despite confirming its 2016 guidance (after two profit warnings issued this year), the company has substantially revised downwards its 2017 EBITDA expectations to a range of €13.7-14bn (down -14% yoy). This is mainly driven by lower power prices in its main markets, that is the UK and France. The group expects a significant rebound in 2018 earnings. On top of a lower guidance for next year, the company expects to continue its operating expenses (opex) reduction as it targets €1bn cost cuts by 2019. Moreover, the disposal of 49.9% of the French electricity transmission network (RTE) has been signed and should be achieved by 2017.
UK revenues hurt 9m results; approval of capacity market is a positive
09 Nov 16
EDF published today its Q3 update in which the group released only its revenue numbers. These showed a 4.7% yoy decrease to €51.96bn, which represents -3.1% in organic terms. If we take out the one-off €1.02bn increase due to retroactive tariff adjustments, then the effect would have been a 5% yoy organic decrease. In France, the group achieved 0.4% in organic terms (including the tariff increase). In the UK, sales dropped 19.7% yoy and 10.4% organically due to lower prices, customer losses and lower volumes. Italy was down 6.3% and -5.8% organically, driven by lower commodity prices and lower demand, partially compensated by higher production volumes. Other activities were down 2% yoy and -3.8% yoy: EDF renewable sales were down 2.6% in organic terms, Dalkia -1.2% from lower gas prices and weather effects, while EDF trading was +6.3% yoy due to the positive performance in short-term markets in gas and electricity. Other international revenues were down 9.5% and -6.5% organically, mainly due to Belgium (-9.1% yoy) and lower gas and power prices. Guidance has been maintained (at the level of the previous downgrade made on 4 November 2016) with EBITDA expected in the €16-16.3bn range.
Concerns over French security of supply and carbon tax application
21 Oct 16
According to the press, the French government will most likely drop the current carbon tax plans. The government was planning to apply a carbon tax only to coal generation assets, but there are growing concerns over the measure being too complicated to implement given that it will be applied only to some assets. If implemented, it might be unconstitutional and not be accepted by the European Commission given that it can be considered state help for EDF in order to boost power prices and improve the profitability of lower emission assets. Moreover, EDF has been forced once again by the nuclear regulator (ASN) to close five additional nuclear reactors by the year-end to perform additional tests on the reactor vessel and steam generator of these reactors. With a third of the nuclear park already stopped in the country, there are increasing doubts over EDF’s ability to cover its supply needs over the winter and this has once again boosted wholesale prices across Europe. Driven by a spike in French wholesale electricity prices (as they are currently above the €70/MWh level) and an expected lower production from its nuclear fleet, EDF has demanded both the Minister of Economy and the Minister of the Environment and Energy to apply a temporary suspension of the ARENH mechanism (a regulated price given to competitors to buy nuclear electricity, set around €42/MWh). As a result, concerns over security of supply and a tight reserve margin for the coming winter have emerged and the output from coal and gas plants has more than doubled in recent weeks due to lower nuclear production. On the other hand, and despite the expected outages, EDF has maintained its nuclear production targets (which were already reduced twice in 2016) at 380-390TWh for 2016 and 390-400TWh for 2017. Moreover, EDF has finally provided the timeline for the five nuclear reactors outages that will be stopped for the additional testing demanded by the ASN: the period will be mainly (for four reactors) during the holiday season from 10 December 2016 to 15 January 2017, with one reactor stopped from 22 October 2016 to 19 December 2016.
UK government gives green light to Hinkley Point C
15 Sep 16
In a communique provided by the UK Department for Business, Energy and Industrial Strategy, it has been stated that the UK government has finally approved the Hinkley Point C (HPC) project. Nevertheless, the government has included some additional measures for this and on all future nuclear projects built after HPC: • no changes have been made to the contract-for-difference strike price of £92.5/MWh; • significant stakes in HPC cannot be sold without the government’s knowledge or consent; • the UK government will be able to prevent the sale of EDF’s controlling stake in the project prior to the completion of HPC’s construction; • the UK government will be able to intervene on any future sale of EDF’s stake once HPC is operational; • the UK nuclear regulator must be informed in due time of any changes in the ownership or partnership of any of the nuclear sites; • the UK government will take a special share in all future nuclear projects built after HPC.
Better visibility over strategy and strong cash flow performance
29 Jul 16
EDF has confirmed that it had entered exclusive discussions with the French financial public entities Caisse des Depots and CNP Assurances over the divestment of 49.9% of RTE. The price at which it has been set for 100% of RTE has been valued at €8.45bn. The Hinkley Point project has been approved by the board of directors (10 to 7), giving the green light for the project. The UK government has responded after the news that it will look into all elements of the project and would make a decision in the autumn. Moreover, the group has confirmed the purchase of Areva NP for €2.5bn, in addition to a €350m earn-out, without the risks linked to OL3 or the audit on the Creusot plant. The group has signed an MoU which is a non-binding agreement and has to be presented to the CE for validation. At the half year mark, the group’s revenue decreased 5.7% yoy to €36,659bn, with EBITDA falling 2.2% yoy to €8.944m, both within estimates. However, net income decreased 17.2% yoy to €2.08bn, mainly due to a negative contribution from associates and €731m of impairment charges. Adjusted net income on the other hand increased by +1.4% yoy to €2.97bn (including the life extension on nuclear assets), which is better than expected. Prior to the ASN decision, the group has decided to increase to 50 years the accounting depreciation of its PWR 900 nuclear reactors, resulting in a positive €0.3bn decrease in depreciation. Net debt of the group decreased to €36.2bn which is also better than expected as the group had positive free cash flows (+107m), in addition to a favourable currency effect (+€1.04bn) from the depreciation of the pound.
A hidden profit warning and lower nuclear output
20 Jul 16
Prior to the half-year results, EDF has decided to update its targets with a 3% downward revision in nuclear output from 408-412TWh to 395-400TWh, mainly due to the French nuclear watchdog (ASN) examination schedule on the additional controls needed for nuclear components (mainly steam generators) after the Areva scandal, extending the planned maintenance outages. Moreover, in terms of financial targets, EDF stated that it confirms its 2016 EBITDA target of €16.3-16.8bn. However, this value already takes into account the retrospective tariff catch-up from the 1 August 2014 to 31 December 2015 period, which is expected to be published by the end of Q3. EDF also confirmed it still expects net debt/EBITDA to be between 2x and2.5x (its values) and a pay-out ratio of 55-65% on adjusted net income (including hybrid payments).
16 Jan 17
We take a look at the rankings of the various countries in Africa that have a significant exposure to mining. We take the Transparency International corruption rankings as our starting point and modify these for exceptional geology and for current UK government travel warnings. Ghana, Botswana and Namibia come out as our top three, with Eritrea, Kenya and Zimbabwe at the bottom of our rankings.
Small Cap Breakfast
17 Jan 17
Global Energy Development (GED.L) — To be renamed Nautilus Marine Services. Schedule 1 from developer and seller of hydrocarbons and related products. Reverse takeover. Raising $10.5m via a convertible. Expected 9 Feb. Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise. Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.
N+1 Singer - St Ives - Downgrade
19 Jan 17
Marketing activation has been impacted by further decline in grocery retail impacting profit by c£5m. Strategic The Company is also taking this opportunity to revise its guidance for Strategic Marketing as its recovery pace is not running at the planned target rate. PBT falls from N1Se £31.9m to £25m. The Company expects dividend to be held based upon lowered guidance and the implied cash flow performance. There do not appear to be any covenant issues. Forecasts and TP under review and downgrade to Hold. We expect the shares to test the 100p level.
19 Jan 17
Aggregated Micro Power* (AMPH): Funding for first peaking power plant project (CORP) | The Mission Marketing Group* (TMMG): Positive trading update (CORP) | Cello (CLL): Increasingly backed by, and leveraging, technology (BUY) | 4imprint (FOUR): Growth backed by strong cash flow continues (BUY) | Allergy Therapeutics (AGY): Positive trading update and market share gains drive upgrades (BUY) | Shanta Gold (SHG): Q4 operating results (BUY) | Sound Energy (SOU): Tendrara extended well test result (BUY) | Revolution Bars (RBG): Price target increase (BUY)
Trading conditions difficult but acquisitions underpin growth
23 Jan 17
FY16 revenue will be £53.7m (FY15: £44.8m), in line with ZC estimate of £53.9m, showing growth of c. 20% yoy underpinned by the three acquisitions undertaken in the year. However, due to higher costs relating to the acquisitions and, to a lesser extent, gross margin pressure, PBT will be in the region of £7.0 to £7.2m equating to growth of between 5.5% and 8.0%. As a result, FY16 ZC profit forecast is reduced by 8.0% to £7.0m. The impact in FY18 and FY19 is muted by the announcement of a further acquisition leading to an increase in revenue estimates of 8.7% whilst profit estimates fall c.4.5% in each year, respectively. Despite the decrease in forecasts the PER multiple on FY17 earnings remains single digit at just 9.1x, against a distributor average of 15.8x. With commitment to the forecast dividend increase reiterated, Flowtech offers an above average yield of 4.1%
N+1 Singer - Northern lights - Shining prospects for 2017
16 Jan 17
As the birthplace of Stephenson, Armstrong and Swan, the North East of England has a proud history of industrial and technological innovation. Despite local economic challenges, the region’s industrial heritage lives on through continuing success in high end engineering and technology. The recent takeovers of private equity backed SMD (subsea robotics) and Nomad Digital (wi-fi on the railways) are testament to this. The North East has also emerged as a leader in genetics and genomics with an enviable life sciences and healthcare infrastructure. Against this backdrop, we expect the region to continue to throw up attractive IPO candidates to build on the six new listings in the past three years. We expect 2017 to be far kinder to the existing portfolio of North East plcs than 2016 (a year to forget) with recent management changes one important theme for the new year. Our top picks are Hargreaves Services, Quantum Pharma and Zytronic (all N+1 Singer Corporate clients) and we are Buyers of Northgate and Grainger.