The year 2022 has been dark for EDF. The public company recorded a record loss of 17.9 billion euros. However, the balance sheet shows a payment of one billion euros in dividends. Explanations.
These are two small lines that challenge behind the front pages of the press. On the one hand, all the media which headlines EDF’s historic net losses in 2022: -18 billion in the coffers of the French electricity giant. A result never recorded by the electrician and among the most considerable in the history of the major French groups, at the end of a complex year (see below). But on the other, nestled in the heart of the “consolidated cash flow statement”, two denominations with particularly high amounts given the financial context of the company: those of the dividends paid to shareholders. 72 million euros distributed indicates the first line, 407 million for the second! How to explain such payments at the end of such a dark exercise?
Dividends linked to the 2021 financial year
In reality, these dividends paid to the many EDF shareholders are not linked to the results of the year 2022, but to those of 2021! The amount of the dividends having been recorded at a general meeting in May 2022 and the payment made a few months later, these expenses are allocated to the accounts for the 2022 financial year, independently of the figures made in 2022, specifies EDF to Internet user. In 2021, EDF boasted of having recorded a profit of 5.1 billion 2021, hence the distribution of dividends.
Thus, in 2022, 1.051 billion euros in dividends were distributed, details the company. It should be noted, however, that all this money did not go directly into the pockets of the shareholders. The main portfolio, the State (84% at that time), was granted not a check but new shares in the company, equivalent to the amount of the dividends, in order to strengthen its control. The majority of the other shareholders had made a similar choice (93.28%). 66 million euros were used for a capital increase and 913 million for the issue of new shares. In total, EDF had to take out of its fund “only” 72 million euros for those wishing to recover money immediately.
As for the other 407 million euros indicated in the 2022 financial report, EDF indicates to Internet user that these are “dividends paid by the group’s subsidiaries to their minority shareholders”, without discussing the distribution. These are, for the best known, Enedis, Dalkia or even EDF subsidiaries abroad (United Kingdom, Italy, Belgium, Germany, China, Brazil, United States). These companies also donated 590 million euros to EDF, the parent company.
All these astronomical amounts are therefore only linked to the performance achieved by the electricity giant in 2021. “No deposit has been paid for the 2022 dividend” confirms EDF. Discussions on the subject will take place at the next general meeting, which should be held in a few weeks. Last year, it took place on May 12. Without predicting the exact content of the debates, dividend payments could therefore be much lower this year.
How are EDF’s historic losses explained?
These dividends are part of the catastrophic 2022 financial results for EDF. The French electricity giant recorded 17.9 billion euros in losses for a record total debt of 64.5 billion euros net. An abysmal negative result, despite a sharp increase in turnover (143.5 billion against 84.5 billion in 2021), linked to the rise in the price of electricity. But the closing of the exercise is painful accounting for EDF. So how can such a mixed record be explained?
Several factors must be taken into consideration depending on the communicated press release unveiling EDF’s 2022 annual results shared on Friday February 17, 2023 by the group. The company first mentioned “the decline in nuclear production in connection with the stress corrosion phenomenon, through the impact of exceptional regulatory measures to limit the rise in prices for consumers in 2022 and, in a to a lesser extent, by the drop in hydraulic production”.
A drop in production
Clearly, to prevent the explosion of prices in the context of the Russian-Ukrainian war where energy is soaring in addition to the shutdown of nuclear reactors for technical reasons, EDF had to get its hands on the wallet. The group itself had to “buy electricity in a context of very high market prices” to respond to a policy of “whatever it costs”, desired by the government, and the implementation of the ” tariff shield”. The State, majority shareholder, therefore forced the company to sell electricity at a lower price than its competitors. A measure of 8.34 billion euros.
In addition, the 2022 calendar worked against the company. Because last year, part of the nuclear fleet in France was immobilized due to unforeseen repairs to reactors due to corrosion. This caused reductions in energy production and therefore in profits. In 2022, up to 25 of EDF’s 56 nuclear reactors were shut down at the same time.
The drop in nuclear production is not an isolated phenomenon because EDF highlights a drop in hydraulic production of 9.4 TWh compared to 2021 which “is explained by historically low hydraulicity”.
To compensate for these drops in production, EDF had to drastically increase the purchase of fuel and energy from other companies, with, for information, a bill of 121 million euros in 2022, compared to just over 44 million in 2021.
An increase in customers but a negative effect?
As quoted in the press release from the French giant, the EDF customer portfolio increased by 3% in 2022, an increase of around one million new contracts, specifies the Figaro. However, this increase is akin to a “financial disaster” explains the daily. Emmanuel Autier, partner in charge of the energy sector at BearingPoint notes that “EDF won customers in a period when the delivery of electricity was not covered. With each new contract signed, the group widened its losses” . EDF did not hide in its press release: “The return of customers to EDF at the regulated tariff has a negative impact (…) given the purchase of the corresponding volumes on the market at very high prices “.
Despite losses, record turnover
The group therefore reached a record debt of 64.5 billion but succeeded in increasing its turnover compared to 2021, rising from 84.5 billion to 143.5 billion in 2022. The group justifies this surge “by the increase in price which translates into an increase in the regulated sales tariff, an increase in the resale value of purchase obligations and an increase in sales by aggregators and gas sales”. However, it is on the net result that the dividends are paid and not the turnover.
Alan Calvez and Maxime Gil