Areva losses belie order book
Areva has cited deteriorating nuclear market conditions as a reason behind a net loss for the first half of 2014. Nonetheless, the company's €44.9 billion ($60 billion) order backlog is over €3.5 billion higher than it was at the end of 2013.
The French nuclear company attributed net losses of €694 million ($931 million) predominantly to losses in discontinued renewable energy activities (€373 million). A long-term agreement with EDF covering the shipment and recycling of used fuel and the fabrication of MOX assemblies from 2013 to 2020 resulted in a €95 million one-off impact, although in the longer term the agreement has added over €5.5 billion to Areva's order backlog. Provisions and assets impairment added further to the company's negative net income.
With the notable exception of the front end business group, which saw a 25.9% increase to €1.128 billion, revenues fell across all of the company's business groups. Mining revenues, at €457 million, were 43% down on the same period for 2013, the net result of a sharp drop in sales volumes following the completion of sales under HEU agreements and inventory drawdowns in 2013, coupled with a reduction in the average sale price over the period.
Other market pressures cited by the French company included the difficult financial positions of US and European utilities, resulting in a downward pressure on maintenance and modernization budgets for existing reactors; the lack of any definite restart date for Japan's idled nuclear reactors, and a continued reduction in market prices, particularly for particularly uranium and enrichment.
Revenues for the reactors and services business group fell 11.9% to €1.501 billion, while the back end business group saw its revenues fall by 28.9% to €695 million including the effects of the EDF agreement. The company's renewable energies group saw an 18.1% fall in revenues to €32 million.
Key operational achievements for the period included the start of production at the Cigar Lake mine in Canada in March, albeit with a slower than anticipated ramp-up; the installation of 84% of the total capacity of Georges Besse II enrichment plant by the end of June, and the full commissioning of the Comurhex II uranium conversion facilities.
As well as the used fuel and recycling agreement with EDF, the period also saw the company sign integrated fuel cycle contracts worth around €400 million plus contracts covering fuel supply and outage services worth in excess of €100 million, as well as contracts totalling €640 million in the reactors and services sector.
Despite the losses, Areva CEO Luc Oursel remained upbeat, noting that the group had achieved a positive free operating cash flow despite the greater-than-expected decline in revenue. "The success of our recovery actions partially offset the downturn in activity. These actions will be reinforced in the second half of the year to adapt to market conditions," he promised.
The company has set itself a target for the rest of 2014 and 2015 of bringing its pre-tax cashflow close to break-even, aiming for it to be "distinctly positive" in 2016.
Researched and written
by World Nuclear News
