Electricite de France S.A.

The stable outlook reflects our expectation that the group's earnings will recover over 2021-2022 thanks to the favorable pricing environment and a gradual uptake in French nuclear production after a disrupted 2020. We also take into consideration the implementation of further financial measures to offset any debt increases. This should allow the group to maintain adjusted debt to EBITDA at about 4.5x by 2023. We also consider that the French government will likely continue actively supporting any potential change in nuclear regulation, even though the approval process--involving EU competition authorities and EDF's employee organization--has been prolonged and the timing of implementing any reorganization is more likely to happen beyond 2022. We could see pressure on the rating if the group's

...The COVID-19 pandemic had a greater effect on EDF--mainly on its nuclear operations--than on peers. The maintenance calendar was disrupted in 2020, which will also have a knock-on effect on 2021-2022. This disruption, combined with the phasing of nuclear production to prioritize reactor availability during the winter of 2020-2021, triggered a sharp decrease in nuclear output to 335 terawatt hours (TWh) in 2020 versus 380TWh in 2019, denting EDF's 2020 results. EBITDA reached 16.2 billion in 2020, down only 2.7% on an organic basis and above our expectation of 15.7 billion, since nuclear output did not drop to 300TWh as we previously expected. The pandemic's hit to EBITDA totaled about 1.5 billion, including 0.7 billion in nuclear generation as a result of maintenance calendar disruptions, 0.6 billion in customer service activities related to power demand reduction, and 0.2 billion due to lower distributed volumes by Enedis. Although nuclear output will remain subdued in the coming two years,...

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