UK nuclear energy producer British Energy plc, announced preliminary annual results today showing a profit of £10 million ($14.2 million) compared with £241 million for last year. The fall was blamed on lower UK electricity prices and a drop in output from its nuclear installations.
The company, which accounts for 20 per cent of UK electricity production, announced 400 job losses in the UK earlier this week in an attempt to cut costs and bring down the cost of production. British Energy is undertaking an operational review targeting overall savings of £150 million.
The impact of the New Electricity Trading Arrangements (NETA) in the UK had been expected to impact the results and a warning had been issued earlier in the year that a loss might be reported. British Energy’s reliance on nuclear production makes it more susceptible to price movements due to the relative inflexibility of nuclear power compared to thermal producers.
During the course of the year, the company experienced unplanned outages at its Hunterston and Dungeness facilities as well as lower output from its Torness plant due to fuel restrictions. British Energy last year paid £640 million to acquire the Eggborough coal-fired power station in North Yorkshire in an attempt to improve trading flexibility.
Earlier this month, majority-owned Canadian subsidiary Bruce Power, signed an overlife lease of the Bruce nuclear plants in Ontario, the largest nuclear complex in the world. British Energy’s initial investment was some £140m. It expects this investment to be just earnings accretive in the current financial year, building to a pre-tax contribution of some £120m by 2003/04.
In a statement, British Energy acknowledged that the weakness in UK electricity prices presents a continuing challenge to its profitability in the current financial year. However, it remained confidence that it would deliver on all its targets, both in the UK and in North America, and achieve long term profitability for the group.
The group proposes a final dividend of 5.3p a share giving a total of 8p, which is unchanged from last year. In London, shares were marked down 18p in mid-morning trading, standing at 288p.