Reuters/Paris


French utilities EDF and GDF Suez have announced cost cuts and asset sales to further shore up balance sheets hit by high debt and slack demand.
EDF, which runs France’s 58 nuclear reactors and is 84.4% state-owned, said yesterday it will announce cuts when it releases full-year results on February 14.
French daily Le Figaro reported the cuts would total €1bn ($1.3bn) and focus on information technology and suppliers, but would not involve layoffs.
A spokeswoman said EDF would maintain planned investment in its network and on nuclear maintenance, as well as the planned hiring of 6,000 new staff, or a net 2,000 new jobs.
The savings plan will come on top of a €2.5bn plan launched in 2011 and due to be completed in 2015.
“EDF could go further if it wanted, but one cannot expect a state-controlled company to increase unemployment in France in order to benefit foreign shareholders,” a London-based utilities analyst told Reuters.
Several utilities have announced austerity drives and asset sales as Europe’s weak economy and the relentless drive to save energy hits demand for electricity.
GDF Suez, Europe’s biggest utility, said in December it would cut costs by €3.5bn by 2015.
Yesterday, GDF Suez and German peer E.ON sold a 49% stake in Slovak gas utility SPP to Czech energy firm EPH for €2.6bn.
GDF has now raised €5bn from disposals and aims for another 11bn under its new programme for 2013/14. It said the Slovak deal would help cut debt by about €1.3bn from 46bn at the end of last year.
The deal was a milestone for E.ON, which has now sold €17bn of assets, topping its target of 15bn by the end of 2013.
EDF shares gained 2.1%, outperforming a 0.3% higher CAC 40 index, boosted by a string of positive brokerage reports. GDF Suez fell 0.8%.
Analysts said the two groups also benefited from recent agreements with France. EDF said on Monday the government had agreed to reimburse it for a 4.9bn euro shortfall in renewables subsidies, lifting its shares 5% on the day.
GDF Suez chief executive Gerard Mestrallet said on Friday a new system of automatic indexation of consumer gas prices would be more in line with its operating costs..
GDF Suez and other suppliers have repeatedly challenged French caps on gas tariff increases in court.
Both agreements seem to indicate President Francois Hollande’s government may not be as unfriendly to utilities as the market feared at the time of his election.
“The least that can be said is that the French government is taking a pragmatic stance,” the London-based analyst said.