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Research Tree provides access to ongoing research coverage, media content and regulatory news on EDF. We currently have 16 research reports from 1 professional analysts.
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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).
Revenues down across all divisions, nuclear output objective reduced
11 May 16
The group had a difficult start of the year with revenue decreasing 6.7% yoy to €21.44bn, falling short of expectations by 2.5% as all divisions within the company scope had a negative performance; adjusted for FX and consolidation, revenues decreased 6% yoy organically. In terms of divisional changes: France -4.8%, UK -13.2%, Italy -4.5%, other international -11.9%, and other activities -7.3% (Dalkia -7%, renewables +0.5% and trading -35.5%). Despite this, the group still confirms its full-year financial objectives, although it has reduced its 2016 nuclear output target.
Panmure Morning Note 30-11-2016
30 Nov 16
RPC, the international plastics products design and engineering group, has delivered yet another strong set of results (1H17 EBITDA +65%, EPS +45%). At the interim stage PBT was +66% (materially better than we had forecast). Topline growth has principally being driven by acquisitions (GCS + BPI), though organic remains a feature (and crucially remains at levels consistent with FY16). The two recent acquisitions have quickly been assimilated into the panEuropean platform and management has raised cost synergy guidance (again).
N+1 Singer - Morning Song 30-11-2016
30 Nov 16
Sanderson has delivered full year results in line with expectations and the 19 October trading update after a strong finish to the year compensated for a slower start. A healthy level of pre-contracted recurring revenue (50%), incremental sales to existing customers and new customer wins at higher average order values helped deliver solid revenue growth in both the Digital Retail (+9%) and Enterprise (+12%) divisions. A decent order book and good sales momentum suggest that the company is on track to deliver on unchanged profit expectations for the current year. We continue to view the valuation (FY17 EV/EBITDA 8.6x) as undemanding given an attractive combination of accelerating growth potential, strong cash generation and growing dividends.
Panmure Morning Note 02-12-16
02 Dec 16
Today James Halstead will be holding its 101st AGM. Trading during the first part of FY17 has been mixed, with some notable challenges. However, movements in FX (i.e. weak sterling) is boosting reported earnings, offsetting UK volume trends and pricing pressures. Whilst earnings are likely to be second half weighted, the picture is in-line with expectations and we are leaving our FY17 PBT estimates unchanged (£47.4m in FY17 vs £45.4m FY16).
06 Dec 16
600 Group* (SIXH): Interim results: order book showing signs of improvement (CORP) | Real Good Food* (RGD): Commodity volatility impacts numbers (CORP) | Minds + Machines* (MMX): .vip goes live in China (CORP | Imaginatik* (IMTK): Interims (CORP) | iomart* (IOM): Quality business as usual (CORP) | Fulcrum (FCRM): Upgrades continue (BUY)
02 Dec 16
On 30 September 2016, when the company announced its full year results, it reported that the UK business had seen a slow start to the year, with particular weakness in repair and renewal spending by the NHS as well as “reticence” in the education sector. However, with the UK only representing about a third of the business, this weakness was expected to be more than offset by the positive effect of a weakened sterling on its overseas business, given the benefits for competitiveness and margins.