Feb. 13 (Bloomberg) -- British Energy Group Plc, the U.K.'s biggest power producer, said fiscal third-quarter profit fell 18 percent, weighed down by the cost of unscheduled reactor shutdowns and lower electricity prices.
Net income for the three months through Dec. 31 dropped to 140 million pounds ($274 million), or 13.5 pence a share, from 171 million pounds, or 29.2 pence, a year earlier, the Livingston, Scotland-based company said today in a statement.
British Energy's revenue depends on wholesale power prices and the reliability of its eight nuclear plants and one coal- fired station. The company said last month that shutdowns at its Heysham-1 and Hartlepool atomic plants will last until at least July, after corroded wires were found.
"The level of large losses has had a significant impact on nuclear output,'' Chief Executive Officer Bill Coley said in the statement.
British Energy incurred a cost of 70 million pounds for the current financial year buying back power it had sold in the forward market in relation to expected output from the closed Heysham-1 and Hartlepool nuclear stations. It spent another 50 million pounds buying back power for next year.
The company's nine-month operating margin dropped to 12.1 pounds a megawatt-hour from 14 pounds a megawatt-hour a year earlier as the cost of running plants rose and the price for its power declined.
Ebitda Beats Estimates
Earnings before interest, tax, depreciation, amortization and one-time items for the nine months was 745 million pounds, beating the 707 million-pound median estimate of five analysts surveyed by Bloomberg News.
The company said it will pay an additional dividend of 14.5 pence a share, compared with analysts' estimates for 15 pence.
Coley has vowed to reduce unplanned production halts from British Energy's nuclear reactors. British Energy fixed a fueling machine at its Heysham-2 plant to provide a more ``consistent performance'' and has reduced the level of "small unplanned losses,'' the company said.
"That's a good result,'' said Lakis Athanasiou, an analyst at Evolution Securities Ltd. in London who recommends investors buy the stock. "They are understanding the plant better,'' Athanasiou said today in a telephone interview. "As long as we don't get any major surprises, there's the potential for a big step up in the stock price.''
Shares Gain
British Energy rose as much as 24.5 pence, or 5 percent, to 513.5 pence in London trading. It was at 510.5 pence as of 9:28 a.m. local time, having earlier dropped 3.7 percent.
Generation from the utility's power plants gained 24 percent in the quarter through December to 15 terawatt-hours, the company said Jan. 11. It produces about one-sixth of Britain's electricity.
Coley is also seeking to position British Energy to participate in the construction of new reactors to replace Britain's aging power plants. It will probably give details of two groups formed to develop new atomic stations in the U.K. before the end of March, he said Feb. 6.
Among considerations for new reactors is plant design. British Energy is studying plans for nuclear units made by four companies, Coley said today on a conference call with reporters. The utility will choose a design based on economics and fuel sources, and may rule out one proposal when it announces its partners, he said.
The company has held talks with more than 10 companies, and will focus on building plants at four nuclear sites it owns in southern England. British Energy won't provide information about partners' stakes in the groups until later, Coley said.