Wednesday, September 28, 2005

Sky-high power prices give British Energy a boost

Latest Business News and Financial Information | Reuters.co.uk

LONDON (Reuters) - Sky-high power prices helped to cement a first quarter profit at British Energy Group Plc following January's financial restructuring, the country's biggest electricity maker said on Wednesday.

The nuclear power generator, which pushed back into the black a few months ago, also said that as of September 25 it had sold some 85 percent of its planned output for the year to March 31 at an average 31.80 pounds per megawatt hour.

In July, British Energy said it had fixed around 75 percent of its planned output for the 2005/06 financial year at an average contracted price of 29.80 pounds.

However, the firm said levels could have been better were it not for problems at its Hartlepool and Heysham 1 facilities, which the firm hopes will be back to normal later next month.

British Energy runs eight nuclear power stations and one coal plant across the country.

It maintained its forecast for 63 terawatt hours of nuclear output for the next two years but admitted this goal was "more challenging" after upping its expected output loss from the two problem plants from 1.0 terawatt hours to 1.5 terawatt hours.

"The company's improved profitability and positive cash contribution in the first quarter reflects higher realised prices for summer power contracts and underlines our confidence in British Energy's prospects," Chief Executive Bill Coley said.

"We remain tightly focussed on improving the operational reliability of our plant -- and resolving the current issues at Hartlepool and Heysham 1," Coley added.

British Energy relisted its shares in January after a debt for equity swap which wiped 1 billion pounds debt off its balance sheet and transferred nuclear liabilities, including certain decommissioning costs, to the British government.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) for the first quarter was 121 million pounds on revenues of 521 million pounds, ahead of some analysts' expectations.

The company said recent restructuring and accounting rule changes meant comparisons were difficult to make.

In the 2-1/2 months to March 31, following the restructuring, EBITDA was 129 million pounds.

British Energy said it had 510 million pounds in cash and liquid funds and a net debt of 166 million pounds at the end of the period. Pretax profit was 45 million pounds.

Total power output for the quarter was 17.4 million terawatt hours against 16.4 TWh the year before.

WARY ON OUTPUT

Analysts were pleased with the financials but wary on output projections.

"In our view, the impact of results above expectations will be dampened by the increased loss of output from the current outages," UBS analysts Vincent Gilles and Siobhan Andrews said in a note.

Earlier this month, British Energy said it was extending the life of its 1,110 megawatt Dungeness B nuclear power plant in Kent by 10 years to 2018.

The UK's largest generator has a total capacity of 12,000 megawatts - 10,000 from nuclear and 2,000 from the coal-fired power station at Eggborough.

Shares were 0.4 percent weaker at 482p by 0934 GMT, valuing the business at around 2.7 billion pounds.

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