Tuesday, February 24, 2015

Nuclear: state of emergency for Areva – Les Echos

Nuclear: state of emergency for Areva – Les Echos

The group released a historical temporary loss of 4.9 billion. The operating loss would total around 1.3 billion euros


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The moment of truth has come for Areva. To put an end to rumors of recent days about the extent of its losses last year, the nuclear group said Monday that “the preliminary and unaudited financial information [...] show a consolidated net income negative group, of around 4.9 billion euros. ” The accounts for the year 2014 will be finalized on March 3, the day before the presentation of the new “competitiveness plan” of the group and its strategic roadmap.

This loss is a gulf in terms of the activity of Areva: it accounted for almost 60% of its turnover (8.34 billion euros). Then Areva was at the end of June, in debt to the tune of 4.7 billion euros, the group will also end up with a level clearly negative equity (in IFRS), they stand at 4 billion at the end of June.

New provisions for the Finnish EPR

The loss is displayed for largely the result of new accounting provisions and impairment, related to a depressed nuclear market, but also to Areva difficulties in carrying on time and on budget its sites. Without specifying the amount, Areva evokes a depreciation in the value of its plant Comurhex 2. Responsible for the conversion of uranium, the building suffered delays and additional costs as the market has deteriorated and that its main customer, EDF, turned to the Russian and Canadian suppliers. The depreciation could reach, according to a union source, several hundred million euros. The group, which had at the end of June from 1.27 billion euros of deferred tax, also show a loss of tax base.

The group will also act new “provisions for loss on completion risks and reactor construction or modernization projects, “including the Finnish Olkiluoto EPR (OL3). Provisions are also spent on the Jules Horowitz research reactor under construction in Cadarache (Bouches-du-Rhône), whose initial budget was at least doubled, about 1 billion euros, which is the subject of a dispute with the Office of Atomic Energy customer and largest shareholder of Areva. Beyond this massive accounting cleansing, the operating loss of the group it would amount around 1.3 billion euros, according to a union source.

What Strategy? What reorganization?

In actant such loss, Areva hopes to settle the accounts of the past and start on a healthier basis. Does it be enough? Arriving late 2011 at the controls of Areva, Anne Lauvergeon’s successor, Luc Oursel (deceased late 2014) had already registered a historic loss of 2.4 billion euros in fiscal 2011. “We n is not immune to additional provisions for ongoing projects “and noted financial analyst. Because the group has not demonstrated its ability to sign contracts or less risky to conduct the on time and the agreed budget. In Finland, TVO and Areva have still not reached an agreement out of their differences. And in his preliminary report remained confidential, the Court of Auditors found that the contract to build the two nuclear islands for EPR of Taishan (China) develops a negative net margin -an analysis disputed by the group.

If it opened in fall of 3%, the share price has hardly budged Monday. “Whether it is 2 or 4 billion euros, it does not fundamentally change the story: it now expects the strategic message, the vision of the activity to 4-5 years and the company’s reorganization plan” says an analyst. The group should soon announce its efforts on running costs and, symbolically, renunciation of the Executive Committee at their variable remuneration for 2014.


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