Why EDF called the state for help – L’Express

This is the hour of reckoning for EDF, which publishes its annual report on Tuesday. The financial situation of the French electricity deteriorated in 2015, with net income divided by three, from 1.2 billion euros against 3.7 billion in 2014. The group cut its dividend for 2015 to 1, 10 per share, against 1.25 in the previous year. A share payment option chosen by the French State, its shareholder at 84.5%, avoids the group to spend more cash.

The investment capacity in question

EDF boasts to have however increased its turnover by 2.2% and EBITDA 1.9% operating, thanks to the increase in production of nuclear electricity in France and the UK. These figures were well received on the stock market, where the action was up over 11% in early trading, after losing nearly 75% year over year. Still, in an interview with World , CEO Jean-Bernard Levy pose “ the issue of maintaining medium-term debt capacity and group investment” .

A call for help clear direction of its main shareholder, while the group’s debt amounted to 37.4 billion euros at end 2015, he has put a lot of money on the table to consider the future. € 55 billion until 2025 to fund the program called “major overhaul” supposed to be the life of the French nuclear power plants beyond 40 years, and nearly 20 billion euros for the construction of two reactors EPR at Hinkley Point, in the UK. A site considered crucial for the French nuclear industry.

Besides the acquisition of the business of Areva reactors, the delay on the Flamanville EPR and participation in the burial of nuclear waste Cigéo project, whose cost has been recently revised upwards by the Ministry of environment. EDF also aims to double its production capacity of renewable energy by 2030.

“The market model does not work”

Problem: electricity is overproduction in Europe. Supply is growing while “consumption stagnates,” notes Jean-Bernard Lévy for Le Monde . Electricity is therefore sells less expensive. In one year, megawatt hour from 38 to 28 euros, which crops the margins of the public group. “Today we have to take into account the lower wholesale market prices, a quite unexpected event that causes us to be a decrease in estimated revenue on the horizon of 2017 and especially in 2018,” warned the CEO, during a conference call Tuesday. Especially as the competition with new players is tougher with the disappearance of regulated tariffs for businesses and communities on 1 January 2016.

Result: EDF recognizes not currently have the means for its ambitions. The fault, in particular, the market sets the price of electricity. “The market model, designed by the political and economic authorities to afford to invest in equipment renewal, does not work,” says in Le Monde Jean-Bernard Lévy. He wants a sales price is guaranteed over a long period, such as “for solar, wind, biomass, or nuclear power in the UK.” For now, he asks the state to be able to increase prices for individuals. A favor that will be hard to give it in a pre-electoral context.