Outlook for 2012 improves for Areva

Areva has raised its forecast for 2012 after reporting first-half earnings higher than previously expected, partly due to increased revenue in its nuclear business and the effects of restructuring its operations.

Areva recorded an operating income of €441 million ($545 million) for the first half of this year, down €287 million ($355 million) from the first half of 2011. Consolidated revenue was up 8.3% compared with the first half of 2011, at €4.3 billion ($5.3 billion), while revenue from the company's nuclear business grew 3.7% compared with a year earlier, contributing €4.0 million ($4.9 million). Meanwhile, pre-tax earnings were down €48 million ($59 million) in the first half of this year at €817 million ($1 billion).

The company's order backlog grew 4.8% in the first half of 2012 to €45.2 million ($55.8 million), with order intakes up 14% compared with the first half of 2011 when orders were cancelled following the accident at Japan's Fukushima Daiichi plant. Orders totalling some €647 million ($800 million) had been cancelled by the end of June 2012. Areva noted that the growth in the backlog for all its nuclear business groups offset the drawdown of the backlog in the renewable energies business group.

Areva's reactors and services business group reported an operating loss of €198 million ($245 million), compared with a loss of €79 million ($98 million) in the first half of 2011. This decrease of €120 million ($148 million) is mainly due to a €300 million ($370 million) provision for losses at completion related to the Olkiluoto 3 project in Finland. This provision adds to the €2.8 billion ($3.5 billion) in provisions that Areva has already set aside for the overdue project.

Earlier this month, Teollisuuden Voima Oyj (TVO) announced a further delay in commissioning of Olkiluoto 3, attributing the delay to the Areva-Siemens consortium, which counter claimed TVO has failed to fully commit itself to resolving outstanding issues. The plant, TVO said, would not begin operating in until at least 2015.

Areva said that the latest provision was "constituted as a matter of prudence, in particular to offset insufficient preparation and commitment on the part of the customer for the performance and validation of tests and the completion of the operating licence application, which are key milestones required before the reactor may be started." However, the company noted that the additional provision "does not materially affect the group's cash spending forecasts regarding this project's costs over the 2012-2013 period."

Areva CEO Luc Oursel commented, "In view of this encouraging performance in the first half of 2012 and early achievement of certain objectives of our 'Action 2016' plan, we are able to revise our financial outlook upwards for the year 2012 as a whole."

It now expects revenue to grow by between 4% and 6% in 2012, compared with an earlier projection of between 3% and 6%. However, Areva says that the financial outlook for 2013 and the 2015-2016 period remains unchanged.

Researched and written
by World Nuclear News