EDF issues another profit warning over reactor outages

By Benjamin Mallet, Dominique Vidalon and Christian Lowe

PARIS (Reuters) -France's EDF warned that nuclear outages would cost it 4.5 billion euros ($4.72 billion) more than it estimated earlier this month, sending shares in the state-controlled power utility down more than 2% on Thursday.

The outages at its nuclear power plants are largely related to inspections and repairs on some reactors after corrosion was discovered on high-pressure pipes.

EDF said the outages would have a negative impact of around 18.5 billion euros on its 2022 earnings before interest, tax, depreciation and amortisation (EBITDA), up from a forecast of 14 billion earlier this month.

It said the outages would also result in a steeper-than-expected cut in its power output, marking the third time it has cut its output forecast this year.

The company lowered its 2022 output forecast to 280-300 terawatt-hours (TWh) from 295-315 TWh.

The warnings come as EDF gears up for the rollout of new generation reactors, key to President Emmanuel Macron's plans to place nuclear power at the heart of France's drive for carbon neutrality by 2050.

EDF shares fell by more than 2% in early trade and were off 1.29% at 8.26 euros as of 0856 GMT. They have lost 15% this year.

"Another very material increase of the extraordinary nuclear outages cost which come at the time of historically high power prices," JP Morgan analysts wrote.

"We do not see yet a floor to the outage risk as the SIS pipes weld corrosion defect is systemic and EDF’s full nuclear fleet is being reviewed," they added.

EDF, which has 56 reactors across France and is responsible for about 70% of the country's power supply, has launched a programme of checks on its entire nuclear fleet.

It said on Thursday that 12 reactors were now offline and being inspected for stress corrosion.

EDF said it saw no need for further reactor outages for checks and repairs beyond those already scheduled.

So far, corrosion has been detected at four reactors and there was evidence it could be linked to the design of circuits at the concerned plants, Regis Clement, EDF's deputy head of nuclear production, told a news conference on Thursday.

The head of French nuclear regulator ASN said on Tuesday that fixing corrosion problems at EDF's reactors would require a "large scale" plan and take "several years" and warned that more reactors may have to be halted.

FINANCIAL CRUNCH

EDF is facing a financial crunch due to the reactor outages, massive investments needed to upgrade and replace its aging fleet and a decision by the government to require it to sell some of its power at below-market prices to help consumers grappling with high energy prices.

"EDF did a 3 billion euros capital increase, yet we believe that more will be needed: especially when considering the nuclear renaissance announced by the French government," JP Morgan analysts said.

"If anything, the current crisis makes this project, and the ambition to reregulate EDF’s nuclear fleet or nationalise it, more legitimate than ever: for France and its European partners," they wrote.

($1 = 0.9544 euros)

(Reporting by Benjamin Mallet, Dominique Vidalon, Christian Lowe and Camille Raynaud; editing by Susan Fenton and Jason Neely)