Trouble in nuclear France: AREVA and EDF in financial distress

France Warns of Nuclear Industry Shake-Up After Areva Loss NYT, By DAVID JOLLY and STANLEY REEDFEB. 23, 2015 PARIS — France’s energy minister said on Monday that an overhaul of the country’s state-controlled nuclear energy industry was imminent, after one of the country’s main builders of nuclear power plants warned of a loss that could hamper its ability to continue operating independently……

Ms. Royal spoke after Areva, one of the world’s leading nuclear technology companies, said in apreliminary statement that it expected a 2014 net loss of about 4.9 billion euros, or $5.6 billion, compared with a loss of €500 million a year earlier.

The French government — which has continued to be a proponent of nuclear power when many other big industrial nations have been more equivocal or have come to oppose it outright — owns 87 percent of Areva, and nearly 85 percent of the other big French nuclear power company, EDF, once known as Électricité de France.

EDF has been facing its own problems, including lengthy delays and steep cost overruns on a flagship plant that it is building at Flamanville, in the northwest of the country. There are also uncertainties about whether a showcase project in Britain will proceed — one in which both EDF and Areva would participate.

The French nuclear industry’s travails underline the gloomy state of the nuclear industry since the Fukushima disaster in Japan in 2011. Moreover, the French industry, though long a world leader, has in recent years been threatened by its own mistakes……..

The loss that Areva warned of on Monday would be substantially larger than its stock-market value of about €3.7 billion, suggesting that the troubled company, plagued by cost overruns and write-downs, may need new funds to continue operating. Areva’s capabilities are vital to France’s ambitions to remain a world provider of nuclear plants and services like supplying fuel.

With few new nuclear plants being planned to replace the older ones that are being phased out in the West, “Europe will see a gradual decline in nuclear’s share of electricity supply,” said Antony Froggatt, an analyst at Chatham House, a London-based research organization…….

Areva shares closed down 2.1 percent in Paris trading on Monday.

The company, which is based in Paris, had previously warned that it was facing trouble; it said in November that it was suspending its financial guidance for 2015 and 2016. Standard & Poor’s cut the company’s debt rating to junk soon after that, citing the company’s “limited headroom.”http://www.nytimes.com/2015/02/24/business/international/areva-nuclear-results.html?_r=0

February 25, 2015 - Posted by Christina Macpherson | business and costs, France, politics

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