Nuclear Delays Drag Down AREVA's Results

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Crippling delays with European nuclear power projects have resulted in French engineering firm AREVA S.A. (EPA:AREVA) (Paris, France) reporting its fifth consecutive year of financial losses.

The company reported a 2 billion euro ($2.2 billion) net loss for the 2015 financial year on sales of 4.2 billion euro ($4.6 billion), which were up just under 2% on the previous year. The loss is less than half the 4.8 billion euro loss ($5.2 billion) reported for 2014. AREVA blamed ongoing delays with its Olkiluoto 3 (OL3) nuclear power project in Finland, alongside impairments related to restructuring and weak market conditions.

The company maintained that despite the loss it is turning a corner for the better, following an injection of cash last year when French state utility Electricite de France (EPA:EDF) (EDF) (Paris) agreed to purchase a controlling stake in its nuclear reactor business for 2.7 billion euro ($2.96 billion). For additional information, see August 4, 2015, article - EDF to Take AREVA's Nuclear Business in $2.96 Billion Deal.

"The 2015 results illustrate the progress we have made this year and open up favourable prospects for 2016 and the following years in view of our fundamentals," said Chief Executive Officer Philippe Knoche. "The group's competitiveness plan had a very positive impact on costs and cash, despite the heavy net loss situation which continues and in a market environment that remained difficult in 2015. Half of this loss of 2 billion euros is due to additional provisions for OL3 and half to provisions for restructuring and impairment related to market conditions."

With regard to the Olkiluoto 3 project, he explained: "This additional loss reflects in particular extra operating costs, increased costs and contingencies for the test phases, and the probable impact of initiated discussions with the customer aimed at ensuring the completion of the Olkiluoto 3 project and to settle the disputes."

Looking ahead, Knoche said: "Concerning the group's liquidity, 2016 is funded and the capital increase which will be launched in the coming months will enable us to gradually regain the group's positive profile. A new phase awaits us in 2016, one we can enter with clarity and confidence in the implementation of the restructuring announced in 2015 and in particular the autonomy of AREVA NP and the creation of New AREVA."

In January, Industrial Info reported that AREVA secured a contract to decontaminate the primary loop of the Krümmel nuclear power plant (NPP), located in Geesthacht near Hamburg, Germany. For additional information, see January 5, 2016, article - AREVA Clinches German Nuclear Decommissioning Contract.

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