EDF Energy profits plunge after fall in energy usage

EDF Energy profits have plunged due to a drop in energy consumption and lower power prices during 2017.

Earnings before interest, tax, depreciation and amortisation (EBIDTA) fell 36 per cent year-on-year to £899 million.

The company reported a £3 million loss on the basis of earnings before interest and tax (EBIT) compared to a profit of £470 million in 2016. The figure excluded a one-off write down on the value of its coal power stations and gas storage assets of £167 million.

The decline was partly attributed to lower energy usage by its customers. Electricity consumption was down 1.9 per cent due to improvements in energy efficiency, while gas consumption was down 2.6 per cent owing to warmer weather.

Profits were also hit by a 12 per cent fall in wholesale power prices as well as a 1.2 per cent dip in nuclear output to 63.9TWh following a shutdown at Sizewell B in late 2017 and record production in the previous year.

EDF Energy finished 2017 with 5.16 million domestic customer accounts, representing a market share of 10.3 per cent. It said the small loss of around 40,000 customers demonstrated its “resilience” in the face of “intense competition” from smaller suppliers.

The company invested £630 million in existing nuclear, coal, renewables and customer-facing activities over the year, as well as £1.49 billion in new nuclear. It has so far signed contracts worth nearly £9.5 billion for Hinkley Point C.

EDF Energy chief executive Simone Rossi, said: “EDF Energy is making big investments in nuclear and renewable power to give Britain the electricity it needs now and in the future. Our Hinkley Point C project is making good progress and delivering big benefits in jobs and skills.

“We are keeping market share in an intensely competitive retail market by staying focussed on customer service and developing innovative new products and services for homes and businesses. We will also continue to work hard to become more efficient and to drive down costs.”

Parent company EDF reported a 16.3 per cent drop in EBITDA to €13.7 billion and a 25 per cent fall in EBIT to €5.6 billion. Net income was up 11.3 per cent at €3.2 billion, while sales were down 2.2 per cent at €69.6 billion.

The contribution of its UK operations to group sales fell by 6.2 per cent to €8,688 million. The decline in the value of sterling against the euro in connection with the Brexit negotiations had a negative impact of €608 million. There was a decrease of just 0.8 per cent when measured on an “organic” basis which excludes the effect of  changes to exchange rates and the scope of the results.