EDF has reported a 33% drop in UK earnings despite hiking gas and electricity prices, having taken a hit from the Brexit-hit pound and a drop in customer energy use.
The French energy firm said underlying earnings for its UK business tumbled from 1.7 billion euro (£1.5 billion) to one billion euro (£889 million) over the year to December 31, while sales edged lower by 0.8% to 8.6 billion euro (£7.6 billion).
Electricity consumption dropped by around 1.9% – particularly among residential customers – while natural gas use slumped 2.6%, with EDF chalking it up to “rising energy efficiency” and warming weather in the UK in 2017.
The company also reported that the number of residential customer accounts declined “only slightly” in 2016, which it took as a signal of “resilience in a highly competitive market”.
EDF changed customer prices twice last year, having initially reduced gas tariffs by 5.2% in March but later hiking them by 5.5% in June, and raising electricity prices first 8.4% and then a further 9%.
Sales were also knocked by the weaker sterling exchange rate, which had “unfavourable impact” of 608 million euro (£540 million), the company said.
But the decline in UK sales, it added, was largely due to “lower realised prices for nuclear power” as well as the drop in residential consumer energy use.
For the group as a whole, sales fell 2.2% to 69.6 billion euro (£61.8 billion) while underlying earnings fell 16.3% to 13.7 billion euro (£12.2 billion), but the company cheered its annual performance for being in line with expectations.
That was “despite the decline in nuclear and hydropower output in France and the unfavourable price conditions in almost all geographic areas where the Group is active.”
EDF chairman and chief executive Jean-Bernard Levy said the results were evidence of the company’s continued strength.
“In line with our forecasts, the 2017 results demonstrate EDF’s solidity, once again profitable, in a difficult market context.
“Continuing the deployment of its CAP 2030 strategy and the successful execution of its performance plan, the Group strengthened its balance sheet and reduced its financial debt by 4.4 billion euro (£3.9 billion) in 2017.”
He added the the company was launching an “unprecedented acceleration” in renewable energy and was also strengthening its “commercial initiatives.”
“Supported by our staff dedicated to working in the service of the energy transition and by a newly reorganised nuclear industry, EDF now enjoys a solid basis to achieve the rebound expected in 2018,” Mr Levy said.
EDF is now forecasting underlying earnings of between 14.6 billion euro and 15.3 billion euro (£13 billion to £13.6 billion) for full year 2018, adding that it will ramp up its cost cutting programme in 2019 in light of the expected drop in nuclear power generation in France compared to 2018.
