UK | Areva strategy under scrutiny after new CEO

Posted on June 17, 2011

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UK | REUTERS | Fri Jun 17, 2011 11:16am EDT

* Government decision ends saga over Anne Lauvergeon’s fate

* Analysts eye new CEO’s strategy, management style

* Lauvergeon had been rumoured to go for two years

* CEO replacement comes amid nuclear investment freeze

* Shares fall 2.2 pct

(Adds Sarkozy, background on state intervention)

By Marie Maitre

PARIS, June 17 (Reuters) – Analysts called for clarity on Areva’s strategy for dealing with a global nuclear investment freeze on Friday after a power struggle at the French nuclear power plant maker led to the dismissal of its long-serving boss.

The replacement of Areva’s charismatic head by a top executive little known outside the company ends a drawn-out battle over the group’s top job but offers no clues on how Areva plans to overcome project delays after Japan’s Fukushima nuclear disaster.

Areva’s thinly-traded shares had lost 1.5 percent at 26 euros by 1122 GMT, bucking a firm CAC-40 blue chip index.

“It is essential that the new management communicate its new targets for 2011 and the medium term in order to clarify the current blur surrounding the evolution of the group’s operations,” analysts at French broker Natixis said in a note.

Areva’s departing Chief Executive Anne Lauvergeon said earlier this week Areva would give a new outlook by the end of June factoring in the impact of Fukushima, a catastrophe which she said was delaying projects worldwide by 3 to 9 months.

But the French government late on Thursday announced that Lauvergeon would be replaced after 10 years in charnge of the state-controlled group by her deputy Luc Oursel.

Lauvergeon disclosed in a statement that she had been informed of President Nicolas Sarkozy’s decision by his prime minister.

ATOMIC ANNE

Political observers say Lauvergeon, dubbed “Atomic Anne” by the French media for her fiery personality, fell out of favour with Sarkozy after spurning his offer to become economy minister in 2007. He later gave the job to Christine Lagarde.

Thursday’s announcement closed a final chapter on a two-year saga over her fate after project issues and a public spat with Henri Proglio, the head of state utility EDF who is seen as close to Sarkozy, further weakened her position.

“The French nuclear industry’s credibility does not amount to one person’s action,” Sarkozy told a joint press conference with German Chancelor Angela Merkel on Friday. He added that as Lauvergeon’s deputy, Oursel was the choice of “continuity.”

French governments have frequently been accused of meddling in corporate affairs. Chief executives from some of the country’s top companies are regularly summoned to the economy ministry or Sarkozy’s office to explain themselves.

The government kicked off the merger of Gaz de France and Suez in 2008 to fend off a foreign bid for Suez. Car maker Renault came under close government scrutiny in 2010 for a plan to produce its Clio model in Turkey, while rival PSA Peugeot Citroen ruled out closing a French plant after coming under fire from the government a year ahead of a presidential election.

 

CONTINUITY?

While analysts welcomed a clear verdict on Areva’s top management after months of speculation, some questioned Oursel’s personality and signs that he could lack support within Areva.

In an unusual step, 17 out of 19 members of Areva’s executive board had urged Lauvergeon’s reappointment in a letter to the company’s supervisory board Chairman Jean Cyril Spinetta.

The letter — signed by every executive board member except for Oursel and Lauvergeon herself — said she was the only person with the “skills and qualities to lead Areva in the years to come.”

In another show of support for Lauvergeon — who started her career as a presidential aide at just 31 — a group of 20 French parliamentarians of all parties signed a petition asking that she keep her job, saying this would guarantee Areva remained a leading nuclear group in the world.

Industry sources have described Oursel, who worked at Schneider Electric and logistics firm Geodis before joining Areva in 2007, as having a good grip on nuclear issues but with a management style that has antagonized some within the group.

Oursel has been mandated with putting in place “a plan to improve Areva’s performance by boosting its competitiveness and bolstering its development,” according to a statement from the office of Prime Minister Francois Fillon.

Areva is the world’s biggest builder of nuclear reactors with 58 reactors meeting 75 percent of its power needs. France aims to capitalise on its atomic energy expertise as the world’s most nuclear dependent country by selling it abroad. The French government owns just under 90 percent of the group.

But the prospects for a global nuclear renaissance heralded in the past two years, have been dimmed by the major nuclear accident at the quake-hit Fukushima atomic plant in Japan.

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Posted in: UK