Utilities equity research

Explore the most viewed and latest equity research and media content for companies within the Utilities sector. Companies within this sector provide services including electricity generation, water, gas and multiservice utilities.

Utilities equity research

Explore the most viewed and latest equity research and media content for companies within the Utilities sector. Companies within this sector provide services including electricity generation, water, gas and multiservice utilities.

Latest Content

FY16 ahead of expectations. Weak guidance and lower dividend payments expected

  • 14 Feb 17

The company published its FY16 results which missed expectations on the revenue side with a 5.1% yoy decrease, but EBITDA reached the upper range of the revised expectations at €16.4bn (-6.7% yoy). The positive effect came from other activities, which includes services, trading, and renewables as together these showed a 22% increase in EBITDA. Operating income contracted by 3.4% due to higher provisions on the nuclear side from a 30bp reduction in the discount rate to 4.2%, generating an increase in provisions of €1,342m and €680m in financial expenses. However, adjusted net income, including hybrid payment, is ahead of expectations as it reached €3.5bn, which represents a 15% yoy contraction but is still 3.5% better than expected, representing an EPS of €1.77/share, 14% ahead of expectations. Reported net debt remained stable at €37.4bn, which is a positive, although operating cash flows decreased by 12.6% yoy to €11.1bn. Free cash flow continues to be on the negative side, but has decreased to €-1.6bn despite the scrip dividend payment. In 2016, the company will pay €2.1bn in dividends (scrip), or €1.06/share. This is above expectations and corresponds to a 60% payout ratio. For the coming years, EDF has reduced dividend payments with a payout ratio maintained for 2017 at 55-65%, but decreased to 50% in 2018, and 45-50% thereafter. In terms of guidance, this is weak as the group expects EBITDA to be in the €13.7-14.3bn range in 2017, and at €15.2bn in 2018, which is in line with our expectations, but below market forecasts. The neutral free cash flow by 2018 does not include the dividend payment, which implies a slight downward revision from previous guidance.

Breakfast Today

  • 01 Feb 17

"The FOMC’s Monetary Policy Statement, which is due at 19:00hrs GMT, will likely be today’s principal talking point. Not that any change in the discount rate is anticipated, but traders will be listening acutely for any suggestion as to when the first of 2017’s three anticipated hikes might kick-off. This will be particularly sensitive for the US$, which yesterday slid to its lowest level against the international basket since Trump’s election was seen to drive the currency to a 14-year high in November. While there may be some truth in the idea that month-end rebalancing by forex traders somewhat weighed on the Dollar, suggestions from President Trump that Japan and China are devaluing their currencies to boost international trade, while a US trade advisor tells the FT that Germany benefits from a ‘grossly undervalued’ Euro, hints that there are some early signs of panic in the White House. Yet the reality of Trump’s rallying call ‘America First’ is founded on inward looking, reflationary and protectionist policies, which are destined primarily to power the US$ ever upward, and something that even Donald might find he can do very little to stop. The damage inflicted on the Mexican Peso after its government drew swords with the President was a clear warning to all US trading partners, but most particularly China, of troubles ahead. Reflecting on this, the Dow Jones remained yesterday’s main casualty, with the other principal US indices closing with just fractional movements. Catching up following the Lunar New Year break, the Hang Seng fell quite sharply, reflecting also news that China’s Manufacturing PMI fell for the second straight month in January. Elsewhere in Asia, the Nikkei recovered from an early setback to close slightly in the positive, while the ASX gained as commodity plays and financials marginally firmed. Other than the Nationwide Housing Prices index, there is little UK macro data due today, although January Markit Manufacturing PMI figures cover most EU territories, including Great Britain. At 10:00hrs GMT, the European commission is also due to release its Economic Growth Forecasts, while later a large batch of US statistics, including ISM Manufacturing, Construction Spending and Vehicle Sales for January, precede this evening’s Fed decision. UK corporates due to release earnings or trading updates include AG Barr (BAG.L), Low & Bonar (LWB.L) and TalkTalk (TALK.L). With the US$ now trading off yesterday’s lows, London equities are expected to recoup some of yesterday’s losses, with the FTSE-100 seen rising some 30 points during opening business. Investors will also be keeping a weary eye out for reports from the Commons this morning, with as many as 100 MPs reportedly planning to vote against a law to trigger Article 50. " - Barry Gibb, Research Analyst

 

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