nuclear-news

France’s nuclear corporation AREVA in deep financial trouble – needs tax-payer bailout

Areva in Deep Financial Trouble, The Energy Collective, Dan YUrman 10 Mar 15 French government and investors ask whether it has hit bottom?

It is no secret that state-owned nuclear energy giant Areva has ten tons of financial debt on a five ton truck. After several years of smacking the bumper with a 2 x 4 to keep half of the IOUs in the air, the truck has hit a red light and all the weight of that debt has come down in one place and at one time. This week Areva’s senior leadership went public with the numbers and what they say is a path toward new earnings. Phillip Knoche, the new CEO of Areva, said, “We have to cut our costs and master difficult projects.”

Here’s the bad news

Areva is facing huge financial challenges with reported losses of {e}4.8 billion ($5.4 billion US) compared to a loss of just {e} 500 million last year. Sales were down in 2014 by 8% compared to 2013. The company wrote down assets by {e}1.5 billion, took a {e}1.1 billion charge on three nuclear projects, and wrote off another nearly {e}1billion in assets that it now believes  are essentially worthless. They include a uranium mine bought by former CEO Anne Lauvergeon who’s expansionist strategy overextended the company in terms of its capital requirements.

The bad news isn’t over

This year the firm expects to see a further reduction in sales of at least 5% compared to 2014. The firm will sell off its unprofitable renewable energy business, and other assets, for {e}430 million. It will scale back other investments. Overall, debt has risen to {e}5.8 billion compared to a market cap of {e}3.6 billion. Essentially, the firm is underwater and needs a huge infusion of capital from the French government………

April 6, 2015 - Posted by Christina Macpherson | business and costs, France, politics