Areva To Reshape Company After Massive Loss

(RTTNews) - Beleaguered French nuclear giant Areva SA (ARVCF) announced Wednesday a transformation plan after it reported a sharply wider loss of 4.8 billion euros or $5.4 billion for the full year. The company has now reported four consecutive net losses.

"The scale of the net loss for 2014 illustrates the twofold challenge confronting AREVA: continuing stagnation of the nuclear operations, lack of competitiveness and difficulties in managing the risks inherent in large projects," CEO Philippe Knoche said in a statement.

Dublin, Ireland-based Areva said it will sell assets, cut costs, and reduce capital expenditure as part of the restructuring plan. Additionally, the company has begun talks with trade unions over layoffs. Areva is about 87 percent owned by the French state.

The company undertook a comprehensive strategic review of operations beginning in November 2014, and has now announced the transformation plan that sets a challenging but economically realistic course for it.

Areva will now refocus on its core business through the mastery of key nuclear processes essential to operators around the globe, and become competitive through the restructuring. It will also reforge the partnership with utility Electricite de France SA or EDF (EDFEF), and strengthen the development of its presence in China.

Areva is also rolling out a competitiveness plan that aims for annual baseline cost savings of 1 billion euros by 2017 in relation to 2014. Capital expenditures will also be cut to less than 3 billion euros between 2015 and 2017, and exceed its previously announced asset divestiture plan.

The company noted that these measures are aimed to give it the ability to reach profit levels comparable to those of its principal competitors in global markets within three years.

Areva also said it will present a three-year financing plan prior to the publication of its half-yearly results.

Knoche said Areva is in crisis, and attributed it to a combination of factors such as unfortunate decisions, deficiencies in the management of certain major projects, and the non-adaptation to changes in the market after the Fukushima accident.

Areva reported a hefty net loss of 4.8 billion euros for 2014, sharply wider than a loss of 500 million euros last year. Sales for the year also decreased 8 percent to 8.3 billion euros from last year.

The loss include a write-down on assets of 1.46 billion euros and a 1.10 billion euro charge related to its three major nuclear projects. It also include a write-down of deferred tax assets of 938 million euros.