EDF unveiled this Friday a capital increase project of around 2.5 billion euros. The State, which owns nearly 84% of the group, will participate up to 2.1 billion, said Bruno Le Maire on RTL. This recapitalization is intended to “support EDF which is going through a difficult financial period”, underlined the Minister of the Economy. Indeed, if the French electricity giant achieved 85 billion euros in turnover in 2021 by selling its electricity to suppliers such as Total or Engie at a very high price thanks to the rise in prices, 2022 will noticeably less profitable.
Shut down reactors
Forced to shut down several reactors due to corrosion problems, EDF produces less electricity than last year. The company “sells less nuclear electricity, as a result income is lower and it needs financial support from the state”, justified Bruno Le Maire. The examination of the 56 reactors in the French nuclear fleet is still in progress, others could be stopped also argues EDF. Added to this are the delays to the Flamanville EPR and the additional costs that this generates.
Already heavily indebted, to the tune of 43 billion euros at the end of last year, the group must also plan significant investments, President Emmanuel Macron having announced his intention to build between six and fourteen EPR reactors in France. by 2050, without detailing the funding.
“Tariff Shield”
EDF’s outlook is also clouded by the “tariff shield” put in place by the State in January to limit rising bills and preserve household purchasing power a few weeks before the presidential election.
This measure will force EDF to sell more nuclear electricity at discounted prices to its competitors, while prices are very high on the wholesale markets. For a decade in fact, in accordance with European directives, liberalization has required EDF to sell part of its production at a fixed price.
The “tariff shield” should reduce by eight billion euros the group’s operating result this year.
Maintain investor confidence
To prevent EDF from losing the investor confidence, whether the group has difficulty borrowing money or borrows at very high rates, the government therefore undertakes to inject 2.1 billion euros of fresh money.
The electricity giant also offers an option to pay dividends in shares (and not in cash) for the 2022 and 2023 financial years, which the State has accepted as far as it is concerned. Finally, EDF announced disposals of approximately three billion euros in total over the years 2022-2023-2024.