France's EDF plans EUR2.5 billion rights issue

18 February 2022

The state-controlled nuclear giant EDF says it is to raise EUR2.5 billion (USD2.8 billion) to help cover the costs of measures imposed to limit French energy bills and a projected fall in nuclear output.

EDF has downgraded its expected nuclear output for the next two years (Image: EDF)

The announcement came as the company released its annual results for 2021, which saw sales up 21.6% to EUR84.5 billion and earnings before interest, tax, depreciation and amortization (EBITDA) up 11% at EUR18 billion.

It said its disposal and cost savings plans were "achieved one year ahead of schedule" and hailed developments such as nuclear's inclusion as a sustainable investment in the EU’s Taxonomy, the recent announcement by President Emmanuel Macron about proposals for up to 14 new EPR2 nuclear reactors and a recent agreement to acquire part of GE Steam Power’s nuclear activities.

However it said that the French government decision last month - in an attempt to llimit the rise in people's energy bills - to increase the amount of electricity that had to be sold at the below market-level prices of the ARENH scheme, and a delay in a rise, would cost it an estimated EUR8 billion.

There is also set to be an estimated EUR11 billion hit from the expected reduction in nuclear power output as a result of "outages or extended outages of nuclear reactors owing to the detection of defaults on the pipes of the safety injection system".

Jean-Bernard Lévy, chairman and CEO of EDF, said: "In 2021, EDF met its commercial, operational and financial targets. The EDF Group's EBITDA grew significantly and reached its highest level since 2015. The deployment of the CAP 2030 strategy was a major success in 2021, testifying to the skills and mobilisation of all men and women of Group.

"The difficulties encountered at the beginning of 2022 have led EDF to implement an action plan aimed to continue this strategy in support of the energy transition and France's industrial and climate objectives for the 2030 and 2050 horizons."

An action plan to strengthen the firm’s balance sheet includes the proposed rights issue, offering the option to receive shares instead of a cash dividend for 2022 and 2023 and to carry out disposals of around EUR3 billion over 2022 to 2024.

In other markets its renewables business saw its EBITDA hit by an "extreme cold snap" in Texas and a dip in wind generation in Belgium "owing to unfavourable wind conditions". Framatome saw an 11.4% increase in EBITDA "as a result of brisk activity at 'Fuel' and 'Primary Component' production plants and the lesser impact of the health crisis".

The UK business saw sales rise but EBITDA fall from EUR823 million in 2020 to a loss of EUR21 million in 2021 resulting "mainly from a 4TWh downturn in nuclear output for an estimated EUR198 million loss and from a substantial decrease in realised nuclear prices stemming from a considerable volume of buybacks at high market prices, estimated at EUR550 million loss."

It said its results in the UK were also hit by residential customers having capped energy prices, which meant the rise in energy prices was not fully passed on to them.

Researched and written by World Nuclear News