Energia
Edf: Substantially higher EBITDA and stabilisation of net financial debt Gradual return to better nuclear fleet availability Good overall operational performance
2023 HALF-YEAR RESULTS
Substantially higher EBITDA and
stabilisation of net financial debt
Gradual return to better nuclear fleet availability
Good overall operational performance
Key financial results :
In a context of recovery of nuclear generation in France, the significant €13.4 billion increase in EBITDA is essentially explained by the higher electricity sale prices of the first half of 2023. The impact of the exceptional regulatory measures introduced in France in 2022 to limit price rises for consumers had no equivalent in 2023. However, the cost of purchases to cover network losses was driven up significantly by high market prices. Operating expenses were also up due to the inflationary environment.
The financial result for the first half of 2023 is an expense of €1.5 billion, an improvement of €1.4 billion over the first half of 2022 explained by:
The financial result excluding non-recurring items, particularly the change in fair value of the dedicated asset portfolio, was -€2.9 billion, a decrease of €3.5 billion.
The Group's net income excluding non-recurring items stood at €6.3 billion. The €7.6 billion increase reflects the strong growth in EBITDA, mitigated by the lower financial result excluding non-recurring items, and income tax expense (an income tax credit was booked in the first half of 2023).
EDF net income totalled €5.8 billion, up by €11.1 billion year on year. In addition to the substantially higher net income excluding non-recurring items, this increase is explained by the following items after tax:
Group cash flow for the first half of 2023 amounted to -€1.6 billion. The €2.4 billion improvement compared to the first half of 2022 was well below the €13.4 billion increase in EBITDA and the €18.8 billion increase in cash EBITDA, as a result of the deterioration in working capital:
Net investments in the first half of 2023 reached €9.1 billion, up slightly by €0.7 billion due notably to the HPC project, extensive maintenance work on the nuclear fleet, and growth in network activities.
The Group's net financial debt
totalled €64.8 billion at 30 June 2023, in line with the objective of stabilisation and showing a slight increase of €0.3 billion since the end of 2022 . The negative cash flow was offset by the €2.4 billion conversion of OCEANE bonds that reinforced EDF's equity.
Also, the bond issues of first-half 2023 and the lower level of short-term debt lengthened the maturity of the Group's debt to 10.5 years at 30 June 2023 (vs. 9.4 years at 31 December 2022).
Financial results by segment:
Segment sales are presented before elimination of inter-segment operations.
The significant increase in EBITDA is explained by the following factors:
The decrease in EBITDA is principally explained by a negative price effect estimated at -€1.8 billion caused by purchases of network losses being made at very high market prices. However, changes in the TURPE network access tariff had a favourable effect estimated at €0.3 billion .
The 10.9TWh decline in volumes distributed (excluding the climate effect), comprising -5.1TWh in the business market and -5.8TWh in the residential market, had a negative impact in EBITDA estimated at €0.3 billion.
Enedis has bec o me a “entreprise à mission” and added its raison d'être to its bylaws : “Acting for an innovative, effective, supportive public electricity distribution service. Connecting society to the collective challenge of buildin g a sustainable world”.
Group renewables excluding hydropower in France
The rise in EBITDA is explained by higher output thanks to new capacities installed. However, wind conditions, which were favourable in Belgium but unfavourable in the United Kingdom and the United States, led to a downturn in the EBITDA.
Investments were down, particularly in the United States.
EDF Renewables
The downturn in EBITDA for generation was caused by operating expenses in the first half of 2023 that had no equivalent in the first half of 2022. Output volumes nonetheless increased by 5.6% thanks to the commissioning of new plants in 2022.
Development expenses associated with growth in the project portfolio also increased in a context of inflation.
In France, the first float ing platform for the Provence Grand Large wind turbines has been launched and the first offshore wind turbine at Fécamp has been installed.
Group Energy Services
All the service activities in France contributed to the increase in EBITDA.
The rise in investments mainly concerned Dalkia.
Dalkia
The rise in EBITDA is attributable to business activity in France and the operation of co-generation plants over the while of the first quarter in 2023 (in 2022 Dalkia was affected by an early shutdown of co-generation due to a shortened winter tariff period).
Inauguration of a low-carbon geothermal heat network in the Paris region powered 77% by renewable energies, avoiding 11,000 tonnes of carbon emissions per year.
The lower contribution to EDF group EBITDA resulted from difficulties with an Instrumentation & Control contract in the United States, and a decline in fuel sales.
Order intake amounted to approximately €2.2 billion at 30 June 2023, a slight increase compared to 30 June 2022, notably attributable to the Installed Base business in North America.
The rise in EBITDA is essentially explained by a recovery of margins in the supply business, driven mainly by allowances in the UK domestic default tariff cap allowing suppliers to recover costs incurred through the market turbulence of previous years.
Sales performance was sound, consolidating margins and market shares in the small and medium business segment, as well as in the Generation business where the higher realised nuclear prices were partially counterbalanced by lower power output following the shutdown of Hinkley Point B in August 2022, and a busier maintenance programme in the first half of 2023.
The increase in EBITDA is primarily explained by the sales activity's return to positive margins for residential electricity customers, after the losses of 2022.
In the electricity generation activities, the unfavourable price effect related to thermal plants, despite the positive contribution of the capacity market, was partly offset by the positive price effect related to renewable energies.
Finally, the gas business benefited from portfolio optimisation and more favourable prices .
Renewable capacities totalled 606 MW net at end- June 2023.
The Marghera Levante 780MW CCG T plant was inaugurated. This plant produces 30% less carbon emissions than the average for Italian thermal plants and has the technological ability to run on up to 50% hydrogen.
The rise in EBITDA in Belgium is due to increased output of wind power (+15.1%), hydropower (+17.4%) and nuclear power (+5.1%), and a favourable price effect.
Wind power capacities totalled 620MW net at end- June 2023 .
In Brazil , EBITDA was down slightly due to the downturn in system services.
Reservoir impoundment has begun at the Nachtigal dam in Cameroon (420MW) and EDF in consortium w as selected to develop the Mphanda Nkuwa dam in Mozambique (1.5GW) .
EBITDA for the gas activities decreased slightly. Volumes sold were down, due to the lower level of business at the Dunkirk terminal, after an exceptional year in 2022 with very high prices on the wholesale markets. The downturn was limited by purchases of LNG at lower prices in first-half 2023 than first-half 2022.
Despite the drop in prices and volatility on the wholesale markets compared to last year, EDF Trading 's EBITDA for the first-half 2023 is up vs. 2022. The performance of trading and optimisation activities remains strong, in a context of reduced market and counterparty risks.
Extract from the consolidated financial statements
Consolidated income statement
(1) Other external expenses are reported net of capitalised production .
Consolidated balance sheet
Consolidated cash flow statement
(1) Includes in 2023, an amount of €776 million for the capital increases of CGN in NNB Holding (HPC) and HMG in NNB Holding (SZC) Ltd. Includes in 2022, an amount of €613 million relating to the share paid by CGN in respect of the capital increases of NNB Holding (HPC) and NNB Holding (SZC) Ltd.
Main press releases since announcement of the
Q1 2023 results
Governance
Simplified Public Offer Tender
Renewables
Nuclear
Customers
Enedis
Edison
Financing
(1) Customers have been counted by delivery site. One customer may have two points of delivery, one for electricity and one for gas.
(2) Including ÉS ( Électricité de Strasbourg) and
the island activities .
This presentation is for information purposes only and does not constitute an offer or solicitation to sell or buy instruments,
any part of the company or assets described, in the US or any other country.
This document contains forward-looking statements or information. While EDF believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions at the time they
are made, these assumptions are intrinsically uncertain , with inherent risk s and uncertaint ies that are beyond the control of EDF. As a result, EDF cannot guarantee that these assumptions will materialise. Future events and actual financial and other
results may differ materially from the assumptions underlying these forward-looking statements, including,
but not limited to, differences in the potential timing and completion of t he t ransactions
they describe .
Risks and uncertainties (notably linked to the economic, financial, competition, regulatory and climate
situation ) may include changes in economic and business trends, regulations,
and factors described or identified in the publicly-available documents filed by EDF with the French financial markets authority (AMF), including those presented in Section 2.2 “Risks to which the Group is exposed” of the EDF Universal Registration Document (URD) filed with the AMF on 2 1 March 202 3 (under number D.2 3 -01 22 ), which may be consulted on the AMF website at
www.amf-france.org or the EDF website at www.edf.fr .
Neither EDF nor any EDF affiliate is bound by a commitment or obligation to update the forward-looking information contained in this document to reflect any events or circumstances arising after the date of this presentation.
This press release is certified. Check its authenticity on medias.edf.com
( 1 ) Net financial debt is not defined in the accounting standards and is not directly visible in the Group's consolidated balance sheet .
It comprises total loans and financial liabilities, less cash and cash equivalents and liquid assets. Liquid assets are financial assets consisting of funds or securities with initial maturity of over three months that are readily convertible into cash and are managed according to a liquidity-oriented policy .
( 2 ) Excluding the €0.6 billion not tendered to the offer for the $1.5 billion hybrid notes that was still in process at 30 June 2023 (reclassified from equity to other financial liabilities), net financial debt would have be en €0.3 billion lower at 30 June 2023 than at 31 December 2022.
( 3 ) Including Enedis , ÉS and the French island activities.
( 4 ) I ndexed adjustment to the TURPE 6 distribution tariff :
+2.26% at 1 August 2022 .
( 5 ) Group Energy Services comprises Dalkia , IZI
Confort , IZI Solutions, Sowee , Izivia , and the service activities of EDF Energy, Edison,
Luminus and EDF SA. The services consist in particular
of heating networks, decentralised low-carbon generation using local resources,
street lighting, energy consumption management and electric mobility.
( 6 ) For Edison 's scope .
( 7 ) Luminus and EDF Belgium.
( 8 ) For Luminus ' scope
( 1 ) E stimate of nuclear output
from its currently operating fleet
( 2 ) Hydropower output excluding the island activities and before deduction of pumped-storage consumption. Total cumulative hydropower output net of pumped-storage consumption amounted to
16.6 TWh in H1 2023 (vs. 15.5 TWh in
H1 2022) .
( 3 ) France, United Kingdom , Italy , Belgi um
( 4 ) Credit ratings are stable after a 1- notch outlook
upgrade in relation with support from the French State, and a 1- notch downgrade of the standalone rating.
( 5 ) Based on scope and exchange rates as at 1 January 2023, and assuming a constant regulatory and tax environment, financing of the tariff cap by the CSPE (contribution to the public energy services), French nuclear output of 300-330TWh, and the current power generation schedule.
( 6 ) Applying constant S&P methodology on the ratio .
Attachment
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