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AREVA’s huge loss on Finland nuclear project

AREVA crumblingAreva Posts 2.04 Billion-Euro Loss on Finnish Project http://www.bloomberg.com/news/articles/2016-02-25/areva-delays-results-by-24-hours-after-securing-bridge-loan, 25 Feb 16   

Areva SA, the French nuclear group planning a 5 billion-euro ($5.5 billion) capital increase by the first quarter of 2017 to stay afloat, posted a fifth year of losses in 2015 as it made new provisions for the completion of an atomic plant in Finland and wrote down the value of assets.

The company, 87 percent owned by the French government, had a net loss of 2.04 billion euros in 2015 after a loss of 4.83 billion euros a year earlier, the company based near Paris said Friday in a statement. It took a 905 million-euro charge related to the Finnish power station project due to extra operating costs and the “probable impact” of further discussions with the customer to settle the disputes over the project and bring it to completion.

Areva said it expects negative net cash flow from operations in 2016 in the range of 1.5 billion to 2 billion euros, due partly to expenses to be incurred on large projects and an unfavorable change in working capital requirements.

 On top of issuing new shares, Areva has agreed to sell a majority stake in its troubled unit that makes nuclear reactors to Electricite de France SA to reduce its debt. Areva’s borrowings have soared with the cost of the Finnish plant and other projects in renewable and nuclear energy. That compounded the negative impact of falling demand for uranium, nuclear fuel and services in the aftermath of a nuclear accident in Japan in 2011.

As a result, Areva’s credit rating was downgraded in December by Standard & Poor’s to B+, four steps below investment grade. Shares of the company have dropped 32 percent this year, extending a drop of 40 percent in 2015. The company delayed its earnings report by one day in order to finalize a bridge loan.

EDF has said it will buy a majority stake in Areva’s reactor unit provided it’s not exposed to the Finnish atomic plant project.

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March 23, 2016 - Posted by | business and costs, France

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