French state-owned energy group Electricite de France has reported that net profits for 2004 more than doubled from the previous year's results. The impressive news will please the French government as it is preparing to sell off a portion of the energy provider in the coming months.
Net profit jumped by 56% to E1.3 billion, achieved through a strong policy of debt reduction and a 4.5% increase in sales to E46.3 billion, which was aided by favourable tariff changes in Germany and the UK. According to an EDF statement, core earnings were also up 10% to E12.1 billion, while group debt fell 18% to E19.7 billion.
For the first time, all of the Group’s European subsidiaries posted a profit. The recovery was particularly noticeable in Germany, where EnBW, 45%-owned by EDF, posted a profit of E43 million, against losses of E612 million in 2003.
In the UK, EDF Energy, a wholly-owned subsidiary, repeated the strong performance of previous years, reporting a net income of E306 million. Net income at EDF Trading improved significantly, up 41% at E202 million.
However, despite an upturn in operations, the South American subsidiaries remained heavily burdened by debt and asset depreciation charges. They posted net losses totalling E1.2 billion.
2005 will be a decisive year for the Group, which must continue to improve profitability, commented chief executive, Pierre Gadonneix. This will largely involve restoring, as part of its industrial program, the financial flexibility essential to controlled European expansion. The imminent Initial Public Offering will be a key to this strategy, which is designed to make EDF one of Europe’s leading energy suppliers.
Meanwhile, Gadonneix also confirmed that EDF had received around 15 offers from interested companies in Italenergia, the holding company that controls the Italian energy group Edison. EDF is looking for a partner to aid its required buyout of the 82% stake it does not currently hold in Italenergia.