France's Areva sees 2011 loss of up to 1.6 bn euros
French nuclear energy giant Areva warned Monday its 2011 operating loss may top 1.6 billion euros ($2.1 billion) as the Fukushima nuclear disaster hit the value of its mining assets, and launched a major cost-cutting drive.
Announcing 2.4 billion euros in provisions, Areva said it planned to sell 1.2 billion euros in assets, slash investments by one-third over the next five years to 7.7 billion euros and squeeze costs to regain its competitive footing.
"To improve economic competitiveness, the group identified and will implement a series of initiatives aimed at reducing operating costs (up to one billion euros in annual savings targeted by 2015 i.e. about 10 percent of the cost basis)," it said in a statement.
Financial director Pierre Aubouin said the net loss was unlikely to improve on the operating loss.
Areva did not immediately how its "Action 2016" plan would affect its 48,000 employees worldwide but later told French unions that 1,200 jobs would be cut in Germany and a hiring freeze would be imposed in France that would result in a loss of up to 1,200 posts per year.
Areva is a world leader in the field of nuclear energy but the outlook for the sector has been clouded by a switch in sentiment in some countries, notably in Germany, in the light of the disaster at Fukushima in Japan.
Areva, in which the French state has a majority holding and is considered a jewel of French industry, said it nevertheless expects organic revenue growth of 3.0-6.0 percent next year leading to operating earnings of 750 million euros.
Operational earnings should hit 1.25 billion in 2013.
"Considering the expected growth in electric consumption, Areva is convinced that the outlook for nuclear and renewable energy development remains strong in the coming years, even if expansion of the global installed base of nuclear reactors is postponed to a certain extent compared with forecasts available before the Fukushima accident," chief executive Luc Oursel said in a statement.
The main provision concerned a 1.46-billion-euro charge for its 2007 acquisition of UraMin, which including previous writedowns wipes out the 1.8 billion euros it paid in 2007 for the mines in Namibia, the Central African Republic and South Africa.
The provision includes charges due to a late start-up of the mines due to lower demand in the wake of the Fukushima accident, a lower expected sale price, and increased development costs as the sites may not be as rich in uranium as thought.
Some 100 million in charges related to impairment of value of production sites due to reduced workload following Fukushima.
Another 800 million euros in provisions were taken for contingencies and expenses that may entail future cash outflows, including 150 million euros for the behind schedule construction of a latest generation nuclear reactor in Finland.
Areva's shares, which had been suspended at the request of the company, fell more than four percent on resumption of trading to 19.45 euros.
The company had been widely expected to announce a cut in jobs in Belgium, the United States and especially in Germany due to Berlin's decision to halt nuclear power generation after Fukushima.
Areva, which has come under pressure from the French government not to cut any its 28,000 posts in France, later told unions it would impose a hiring freeze that would result in effect in a reduction of up to 1,200 jobs per year as people retire or voluntarily leave the company.
Areva would only say that no one in France would be forced out of their job.
The company also told unions that 1,200 jobs would be cut in Germany, a representative of the CGT union told AFP, but did not mention any job losses in Belgium or the United States.
© 2011 AFP