Nuclear Utility EDF Cuts Dividend

By Pilar Martinez,
Money & Investing Writer

Electricité de France (EDF) is making big changes.

European’s leading nuclear power plant, is deciding on the best approach to the fairly new impairment charges initiated.  These impairment charges have reportedly been worth €3.64 billion.

The Wall Street Journal states, this is big money, and an even more pronounced issue and dilemma for the power company. The utility decided to accept the last dividend in cash.
By accepting cash instead of shares, the company will save money and plenty of it.  The minimum of €1.8 billion seems to be the amount the utility will save.

Power utilities in Europe are experiencing extremely low demand.

They are also seeing higher taxes. More so, the pricing is becoming weakened across the regions.

Power utilities are in trouble and shareholders are trying to save as much money as they can.

Shareholders have the option of accepting dividends in shares.

Accepting dividends in cash will cause them to lose more money.

As stated in The Wall Street Journal, “The dividend offer comes after the utility said net profit in the year to Dec. 31 fell to €1.19 billion from €3.70 billion in 2014. Excluding the charges, net profit fell to €4.82 billion from €4.85 billion previously.”

The net profit of utility power has been consistently losing money.  In addition to this already hard enough loss, additional charges have really done a substantial amount of harm.

Investors have embraced EDF’s decision to cut dividends.

This will benefit investors and has shown growth and improvement of the decision with the implementation of higher operational profitability.

Proof is in the numbers. According to MarketWatch, “Earnings before interest, tax, depreciation and amortization rose 1.9 percent to EUR17.60 billion, beating a median expectation for EUR17.48 billion. Overall revenue rose 2.2 percent to EUR 75 billion from EUR 73.38 billion.”

Electricité de France is undergoing big changes.  They are on the watch and shareholders are being affected by the decision of EDF.

According to The Wall Street Journal, “EDF needs to control its cash reserves after it agreed to buy a controlling stake in the reactor unit of troubled state-controlled nuclear engineering group Areva SA, ARVCY 4.85 percent as well as the cost of constructing new nuclear reactors in the U.K.”

Words of the wise, Wall Street Journal continues to report on the utility power issue and how Chief Financial Officer Thomas Piquemal will adjust and adapt to any issue which come along.

A version of this article appeared in the Tuesday, February 23rd print edition.

Contact Pilar at
pilar.martinez@student.shu.edu

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