EDF reports 47% drop in 1H10 profit, Hong Kong consortium bids US$9.1bn for UK T&D unit

Electricite de France SA (EDF), Europe’s largest power utility has reported a 47% decline in its first half profit, as a result of a provision taken on nuclear development in the US resulting from delays. The company’s net profit amounted to €1.7bn in 1H10, compared to the €3.1bn seen in the first half of 2009. The news was a disappointment to analysts who had been expecting net income of €2.52bn. However, EDITA increased by 4% to €10.4bn, 0.4bn up from estimates. The €1.1bn provision was taken due to delays in the development of nuclear reactors in the US and expectations that the construction of its Flamanville EPR nuclear reactor in France will suffer cost overruns and be delayed. It now expects the total cost to amount to €5bn from the €4bn initially estimated. The company is operating under the threat of legislation from the French Senate, which is considering forcing it to sell up to 25% of its nuclear generating capacity to competitors such as GDF Suez SA.

Cheng Kong Infrastructure, its subsidiary Hongkong Electric Holdings Ltd and the Li Ka-shing Foundation have made a joint US$9.1bn bid to buy Electricite de France SA’s UK power networks, according to a filing to the Hong Kong stock exchange. The networks cover the southeast and east of England, including London. EDF has not yet formally accepted the offer, given the need to complete consultations with the EDF worker union, but it has said that it will not pursue talks with other potential bidders for one year. The transaction will also require regulatory approval from the EU. EDF has been looking to sell the network in order to reduce the debt built up from its purchase of British Energy Group Plc in 2008. Li Ka-shing, Hong Kong’s richest man has control of Cheung Kong Infrastructure and has an estimated personal wealth of US$16.2bn. The company already has a stake in the UK’s Northern Gas Networks Ltd and in April agreed to buy a GBP211.7m stake in UK power utility Seabank Power Ltd from BG Group. According to Bloomberg data, around two-thirds of Cheung Kong Infrastructure revenue came from overseas activities in 2009.