EDF Says Trading Ahead of Target Despite Market Turbulence

EDF Says Trading Is Ahead of Target With 9-Month Revenue Up 63%

Francois De Beaupuy

11 Nov 2021, 01:41 AM IST

(Bloomberg) --

Electricite de France SA’s trading business is ahead of target for this year despite the recent turbulence in energy prices, Chief Financial Officer Xavier Girre said Wednesday.

Revenue and profit margins exceeded expectations at the end of September and again in October, Girre said on a conference call on Wednesday. EDF’s trading unit was reported to have lost about 400 million euros last month in a bet on power prices that went wrong, which was offset by gains elsewhere.

“EDFT has been carefully managing the situation,” Girre said. “A very limited number of books suffered as a result” of the unprecedented turmoil, which was only for a “very short period of time.”

Energy prices in Europe have swung wildly since the end of August, with benchmark gas and electricity contracts hitting records last month amid fears over supply. Soaring wholesale costs have put pressure on suppliers across the continent, though power generators have profited from rebounding demand.

EDF Trading’s revenue jumped 63% in the first nine months of the year to 1.1 billion euros ($1.3 billion) while the utility’s total sales rose 17% to 57.1 billion euros. The results give the debt-laden company some respite at a time when proposed French reforms to boost regulated prices for its nuclear output are struggling to get approval from the European Union.

Girre addressed the reported trading loss, saying there was no “manipulation” within EDF Trading and no employee was fired. The CFO also said he’s “very confident” that the company will reach its target for earnings before interest, taxes, depreciation and amortization of more than 17.7 billion euros this year, and “comfortable” with the consensus analyst estimate of 18.3 billion euros.

Next year, power prices could represent a “very significant positive contribution” to Ebitda, which should grow “quite significantly” versus 2021, Girre said. However, EDF remains “quite cautious” amid market volatility, and any unexpected production outage in France or the U.K. would have a “significant impact” on earnings given the high prices, the CFO said.