French energy company Electricite de France or EDF Group SA (EDFEF.PK) reported Thursday a slight decline in first-quarter sales, reflecting the sale of UK networks last year, despite strong nuclear power generation in France. However, sales grew 1.3 percent on an organic basis. The company also backed its fiscal 2011 forecast of organic EBITDA growth and at least stable dividend.
For the first quarter, the company's total sales edged down 0.8 percent to 19.60 billion euros (about $27.83 billion) from prior year's 19.76 billion euros.
In France, total sales increased 3.8 percent year-over-year to 11.42 billion euros, mainly on increase in integrated regulated tariffs in August 2010 as well as higher volumes sold on the wholesale markets.
The region's nuclear power generation increased 6.5 percent from the previous year, but was partly offset by a 2.1 TWh decline in hydropower generation due to exceptionally low rainfall.
In the quarter, sales in total international & other activities fell 7.2 percent to 8.34 billion euros.
In the UK, sales plunged 18.9 percent from last year to 2.56 billion euros, mainly due to a scope effect of 488 million euros associated with the sale of distribution networks and the Eggborough power plant. Organic sales decline was 5.4 percent caused by lower electricity and gas consumption due to mild weather and customer portfolio streamlining, which led to a drop in its number of customers.
The 'Other activities' segment sales dropped 12.1 percent mainly due to the decline in business at EDF Trading, caused mainly by poor commodity market visibility.
However, sales in Italy rose 6.4 percent, but generated negative margins in the gas business associated with difficulties encountered during the current renegotiation of long-term gas contracts. The other international segment's sales increased 5 percent mainly on solid performance by Belgium and Poland.
Sales at EDF Energies Nouvelles, where EDF holds 50 percent stake, were stable compared to last year, while sales of the Development and Sale of Structured Assets fell 40 percent. This was offset by 17.7 percent rise in Generation and 30.2 percent growth in Operations & Maintenance sales.
EDF, on April 8, has launched a tender offer for all of EDF Energies Nouvelles shares it does not hold at a price of 40 euros per share, ex dividend, in order to strengthen the company's positions in the renewable energy sector.
The company has reduced its debt by 7.3 billion euros, mainly with the sale of its 45.01 percent stake in EnBW to the Land of Bade-Wurtemberg for about 4.7 billion euros.
Further, EDF Chairman and Chief Executive Officer Henri Proglio said, "The performance of the first quarter enabled the Group to confirm its 2011 financial targets and reflects, notably, an increase in nuclear power generation in France."
EDF still sees organic EBITDA growth between 4 percent and 6 percent and dividend at least stable compared to 2010.
The company is scheduled to conduct its annual general meeting on May 24.
EDF is currently trading at 28.58 euros in Paris, down 0.04 euros or 0.14 percent.
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