British Energy, the East Kilbride-based nuclear power generator, said yesterday core earnings fell by 28% last year mainly because of breakdowns at some of its power stations.

British Energy, the East Kilbride-based nuclear power generator, said yesterday core earnings fell by 28% last year mainly because of breakdowns at some of its power stations. However, the results were still ahead of analysts' forecasts due to higher prices for electricity in the final quarter of the final year.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to £882m from £1.22bn a year earlier. Analysts had exp ected EBITDA of just under £800m.

Chief executive Bill Coley said the overall financial performance was disappointing, and that the boost to prices - helped by the soaring cost of oil - would not make a big impact on the 2008/09 year due to forward selling.

British Energy owns eight nuclear power stations and is currently a takeover target for some of Europe's biggest utilities. It has been in play since the government gave the green light to new nuclear builds in January.

Coley said he was pleased with the operational side of the company despite Tuesday's first unplanned shutdown at its Sizewell B reactor for three and a half years.

"It appears to be an instrument problem. There is no issue with the plant and it should return (to operation) very quickly," he said on a conference call with journalists.

He denied the fault had harmed the company's reputation in the City. "Sizewell is a marvellous plant - it's as well as any plant in the European Union," he said.

However, shares in the company fell 12p, or 1.6%, to 725p despite the results beating the market consensus.

"It's slightly surprising. maybe some people are concerned about the Sizewell outage," said Colin Pollock, a Credit Suisse analyst.

The utility's earnings depend on the reliability of its power stations and the revenue from sales of electricity. Production halts caused by corroded wires at Hartlepool and Heysham-1 that started in October contributed to a 1.8% fall in full-year nuclear output to 50.3 terawatt-hours. The company's sales margin fell to £10.70 a megawatt-hour from £17.10.

The company expects to earn more from future power sales after UK electricity prices surged to record levels, boosted by costs for natural gas and coal.

British Energy said it has sold 38.7 terawatt-hours of power for the current fiscal year at an average £43 a megawatt hour and has contracts in place for another five terawatt-hours at £32 a megawatt hour. The realised price last year was £40.70 a megawatt hour.

Repairs at the Hartlepool and Heysham-1 are on schedule to be completed by the end of the year, Coley said.

The company reported problems at another site yesterday, saying the 595-megawatt Hunterston B7 reactor had shut down. The company could not explain what happened or when the reactor would be back up and running.

As well as problems at some of its power stations, some City analysts said a lack of news of potential bidders may also be weighing on the share price.

Seen as key to the government's plans to build new nuclear stations, the company received a bid from state-controlled Electricité de France of just under 700p a share earlier this month, and has said it is in talks with other parties.

Centrica, owner of British and Scottish Gas; Germany's RWE and Spain's Iberdrola, which owns ScottishPower, have all been named by analysts as potential suitors.

Coley refused to comment on the takeover situation, nor his personal plans should the company, which is 35% owned by the British Government, be sold off.

The dividend was maintained at 13.6p a share.

Elsewhere in the sector, ScottishPower said it expects to restart another 1200 megawatts of generation at its Longannet coal-fired plant within 10 days to boost power supplies for the summer.

A problem with a 600-MW unit at the power plant had to be fixed.