EDF's Board of Directors on 29 July approved the condensed consolidated financial statements for the six-month period ending 30 June. The report showed that the COVID-19 pandemic had caused a slowdown in construction and maintenance of NPPs in both France and the UK, with further delays expected to the schedules for completing both the Flamanville and Hinkley Point C projects. EDF Chairman and CEO Jean-Bernard Lévy said, however, that despite the economic slowdown, “the impact of the crisis on our main financial indicators remains contained”. He added: “This context requires us to adopt a savings and disposal plan that will allow us to continue deploying our CAP 2030 strategy and to keep our debt under control. Decarbonising the economy, combining the fight against global warming and sustainable growth, is a development opportunity for EDF."
Nuclear output in France amounted to 174.0TWh, down 29.7TWh compared with the first half of 2019, around 13TWh of which was attributed to the health crisis. In the UK, nuclear output was 22.7TWh, down 1.8TWh compared with the first half of 2019. This was due to the schedule of maintenance operations and planned outages. Output was still negatively impacted by the outages of Hunterston B and Dungeness B NPPs. In Belgium, both nuclear and wind output were up.
To mitigate the impact of the health crisis on the Group’s financial situation, a cost cutting plan and a disposal plan are being implemented, EDF said. They aim to cut costs, with a target of €500 million ($589m) in reductions to operating expenses between 2019 and 2022, and a stabilisation of net investments to around €15.0 billion (3) on average per year over 2020-2022. In addition, further asset disposals will be initiated, with the aim of approximately €3 billion over the period 2020 to 2022.
EDF said discussions are continuing between the French State and the European Commission on the overhaul of the regulation of the French nuclear fleet, “with no certainty of success at this stage”. The aim is to define an appropriate and balanced regulatory framework that would also lead to a reorganisation of the Group’s activities in order to strengthen its capacity to invest in the energy transition.
Framatome’s sales at the end of June 2020 amounted to €1,490 million, down 4.6% in organic terms compared with the first half of 2019. Framatome’s EBITDA amounted to €211 million in the first half of 2020, i.e. an organic increase of +0.9%. Framatome’s contribution to the Group’s EBITDA amounted to €98 million, up 28.4% in organic terms compared to the first half of 2019.
The health crisis is impacting the “Installed Base”, “Fuel” and “Projects and Component Manufacturing” businesses for a total estimated amount of minus €37 million in EBITDA. These effects were partially offset by lower overhead expenses due to the health crisis. EBITDA also benefited from the continuation of the plan to reduce operating costs. Framatome finalised the acquisition of the commercial nuclear services of BWX Technologies in the USA. “It is expanding its portfolio of equipment and tools for the inspection and maintenance of nuclear power plants, thereby strengthening its position in the nuclear energy sector,” EDF noted.
In the United Kingdom, sales in the first half of 2020 amounted to €4,595 million, up 3.6% in organic terms. EBITDA increased to €438 million. The health crisis had an overall negative impact on EBITDA of minus €128 million, due mainly to the drop in consumption (-12%) in the portfolio of industrial and professional customers.
The positive trend in EBITDA “can be explained by the increase in nuclear realised prices and the re-instatement of the capacity market”. These positive elements were partially impacted by lower nuclear output due to maintenance operations and planned outages. EDF said that, in a highly competitive environment, the portfolio of residential customers was stable overall and margins were increasing thanks to an improved customer mix.
Finally, the health crisis has slowed down nuclear construction and maintenance projects. As regards Hinkley Point C, “the risk of delays in the commissioning schedule is high”. In September 2019, it has been estimated at 15 months for unit 1 (planned for the end of 2025) and at nine months for unit 2. These postponements would lead to an additional cost of approximately GBP700 million ($914 million), EDF noted “The impacts of Covid 19 on the schedule and costs are currently being assessed (including impacts on supplier production conditions and associated delivery times) and increase the risk of postponement of planned commissioning dates. A comprehensive study to assess the need for an updated schedule and costs is currently underway and will be completed in the coming months.”
