UK | Areva warns future unclear after Fukushima

Posted on July 27, 2011

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UK | FINANCIAL TIMES | 27 July 2011

Areva, the world’s biggest maker of atomic reactors, has warned that it remains “extremely difficult” to assess the long-term impact on the industry of the Fukushima nuclear plant disaster but said orders were only €1bn ($1.4bn) lower than before the event.

The company’s disclosure on the size of its order book at the end of June provides the first concrete evidence of the financial implications of the Japanese disaster for one of the most important nuclear suppliers.

In his first statement since taking charge of the company from Anne Lauvergeon last month, Luc Oursel, Areva’s chief executive, said almost €200m of orders had been cancelled since the earthquake and tsunami in March.

The cancellations were for uranium fuel and came from customers in Japan and Germany, the latter of which promised to scrap atomic power by 2022.

However, Mr Oursel said the company’s order book remained robust at €43.1bn, some €1.1bn lower than at the end of last year. “The fundamentals underpinning the development of the nuclear market are unchanged,” he said before highlighting “strong growth in demand for electricity in the coming decades, diminished fossil resources, the search by many countries for energy independence and the growing need to address climate changes”.

Nuclear industry executives and French government officials are particularly critical of the fact that Germany will become heavily reliant on Russian gas as a result of its decision to abandon nuclear energy.

Some within the industry were surprised when Nicolas Sarkozy decided to replace Ms Lauvergeon last month. While “atomic Anne”, as she became known, skirmished with the French president over how the state-owned company should be run, it was felt her years of experience meant she would be a safe bet in the post-Fukushima period.

However, Mr Sarkozy opted to promote her low-key deputy, Mr Oursel, in the hope that he would bring about a rapprochement with the group’s biggest customer, the state-controlled utility EDF. Henri Proglio, EDF’s executive chairman, and Ms Lauvergeon were engaged in a public dispute for years.

The first sign of a thaw in relations came earlier this week when Areva and EDF agreed to co-operate on reactors and fuel. Eric Besson, industry minister, said publicly that Mr Proglio was not pushing to increase his company’s stake in Areva – a cause of conflict with Ms Lauvergeon.

Mr Oursel has also been asked to improve the company’s unimpressive financial performance and meagre profit margins. In the first six months of 2011 recurring operating profit fell to €62m from €213m in the same period last year. He said the company was analysing the longer-term implications of Fukushima, which will be incorporated in a new strategic plan over the next few months.

While Germany and Switzerland are scrapping their atomic power stations and Italy has frozen its programme, other countries such as the UK are pushing on with plans to expand.

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Posted in: UK