(Corrects Hinkley Point figure in paragraph 6)
* Cash burn narrows to 1.6 bln euros from 2.1 bln
* Sticks to target for positive cash-flow in 2018
* New stock dividend will keep cash in the group
* Shares down 0.5 pct in early trade
By Geert De Clercq
PARIS, Feb 14 EDF pledged on Tuesday to
deliver positive cash flow next year before it has to invest in
upgrading its ageing French nuclear plants and building new
reactors in Britain.
The French utility, which is 85-percent state-owned, made
the commitment as it posted a 6.7 percent fall in 2016 core
earnings to 16.41 billion euros following the temporary closure
of about a third of its French reactors last year for safety
EDF has been wrestling with heavy debts and has had to
borrow just to pay dividends for several years. It had negative
cash flow of 1.6 billion euros last year, and 2.1 billion euros
CEO Jean-Bernard Levy said that cost savings, asset sales,
lower investments and a state-funded capital injection will
boost EDF's finances by next year.
"The year 2018 will be the year of the rebound," he said.
EDF needs to finance the 18 billion pound (21.15 billion
euros) build of two nuclear reactors in Hinkley Point, Britain
and a 50 billion euro upgrade of its French nuclear stations
over the next decade.
It also needs to spend 5 billion euros on smart meters and
billions more buying and restructuring the nuclear reactor unit
of fellow state-owned company Areva.
Levy declined comment on Japan's Toshiba, which on Tuesday
said it expected to book a $6.3 billion hit to Westinghouse and
postponed its 2016 results by a month as auditors try to
determine its U.S. nuclear business' liabilities.
Westinghouse's AP1000 reactor is the main competitor for the
Areva EPR third-generation reactor that EDF plans in Britain.
Such reactors have improved safety features, but are more costly
to build. Delays mean none have yet been connected to the grid.
While problems at Westinghouse ought to benefit the French
nuclear industry, EDF-Areva's chances of winning new export
contracts are slim due to new safety requirements following the
2011 Fukushima disaster, competition from Chinese, Russian and
Korean reactor makers and ever-cheaper renewables, industry
CAPITAL ON HORIZON
EDF said its planned capital raising should be launched
before the end of March, market conditions permitting, after its
board approved a 4 billion euro increase on Monday. The French
state is set to subscribe for 3 billion euros.
It is planning a share dividend for the second year running,
to which the state will again subscribe. By taking this option
last year it left an extra 1.8 billion euros in EDF's coffers.
EDF said it plans to distribute 2.1 billion euros in
dividends on its 2016 earnings, but the dividend per share will
not be announced until the capital increase is launched.
Shares in EDF were down 0.5 percent following the results.
They have lost about 20 percent over the past six months, making
them the second-worst performers in the Thomson Reuters Europe
EDF's 2016 revenues fell 5.1 percent to 71.20 billion euros,
while net income rose 140 percent to 2.85 billion due to lower
impairment losses in 2016, and the extension to 50 years of the
accounting depreciation period of some of its nuclear plants.
EDF set a core earnings target of 13.7-14.3 billion euros
for 2017 and of at least 15.2 billion euros for 2018.
Levy said the higher 2018 core earnings target should be
achievable thanks to higher power prices, further cost cuts and
the gradual return to a normal nuclear output in France.
This year, French nuclear power production will be capped by
planned maintenance and the continued outages of EDF's Bugey 5,
Fessenheim 2, Gravelines 5 and Paluel 2 reactors, which have
been shut for months due to safety and technical problems.
(1 euro = 0.8512 pounds)
(Editing by Sudip Kar-Gupta and Alexander Smith)