French utility giant EDF has suffered a drop in half-year profits amid rising competition, unexpected outages and lower nuclear energy prices across the UK.
The energy provider saw adjusted earnings tumble 21.8% to 6.9 billion euros (£6.1 billion) in the six months to June 30, while net income dropped 3.7% to 2 billion euros (£1.7 billion).
Sales fell 2.6% to 35.7 billion euros (£31.9 billion).
A breakdown of regional operations showed that its UK operations suffered the biggest drop in earnings for the period, falling 34.4% to 627 million euros (£560 million) due to the “significant impact” of lower nuclear prices, as well as a drop in residential power use amid milder weather.
The UK is the company’s second largest market, with power stations at sites including near Lancaster, Dungeness, Nottinghamshire and Scotland’s east coast.
Its French operations have also been hit by outages affecting a number of reactors. EDF reported a 28.9% drop in earnings from its national generation and supply activities, and a 14% drop from its regulated activities.
EDF added that “intense competition” also hit the business.
Chairman and chief executive Jean-Bernard Levy said: “In an unfavourable market context and in line with its forecasts, the group is continuing to implement its performance plan and maintains its annual objectives.”
The company has embarked on a turnaround plan and an asset disposal programme, which it said have already resulted in a 2.2% drop in operating expenses compared to the first half of 2016.
EDF has also suffered from the rising costs of building the Hinkley Point C nuclear power station in Somerset.
It announced earlier this month that the plant, which is expected to provide 7% of Britain’s electricity needs for 60 years, would cost an extra £1.5 billion, based on 2015 exchange rates.
That brings the total cost of building the Somerset site to to £19.6 billion.
However, EDF said there will be no financial impact on UK consumers of the increased costs.
The company is also expecting a lower rate of return on the project at 8.5%, compared to 9% initially, which could drop to 8.2% and result in an extra £700 million in costs if the project suffers from months-long delays.
EDF said there was a risk of deferral of 15 months for the power station’s Unit 1 and nine months for Unit 2, but it was sticking to the objective of 2025 for start-up.
Despite the profit drop, Mr Levy cheered progress in the company’s renewable division, highlighting its takeover of French wind energy firm Futuren, and adding that “the reorganisation of the French nuclear sector has also reached essential and positive milestones”.
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