French nuclear powerhouse Areva on Wednesday said it would combine cost cutting with a sharper focus on nuclear power growth to overcome daunting financial difficulties that include losses of about $5.4 billion in 2014.
The first dramatic move would be to trim $1.1 billion in operating costs over the next two years, which would include discussions with union representatives on the possibility of job cuts, although Chief Executive Officer Philippe Knoche declined to specify that any decision on job cuts had been made. However, the plan included salary and hiring freezes for the company's approximately 45,000 employees worldwide, about two-thirds of whom are in France.
Areva also intends to sell about $500 million in assets, including some renewable power interests, and reduce capital expenditures to under $3.3 billion through 2017.
Areva said revenue fell 7.2 percent in 2014 from 2013 to $9.3 billion. Its nuclear operations accounted for $9.1 billion in revenue, while renewable operations accounted for $60 million. Revenue was down 7.3 percent for nuclear and 21.4 percent for renewable operations during the year.
Knoche said sales, which dropped 8 percent in 2014, were expected to fall another 5 percent this year.
Areva has already said that major delays at construction projects in France and Finland have tied up revenue and given rise to costly construction overruns. In addition, a possible construction project at Hinkley Point in England has not begun and there is no firm commitment yet from partner Electricite de France on going ahead with the plant expansion, which is expected to cost about $25 billion.
Areva has some inroads in China, which is the epicenter for growth in the industry, but foreign companies there are always in danger of being boxed out by China's business policies that limit foreign investment after initial agreements that include sharing proprietary technologies. Areva is building two EPR units at the Taishan site in Guangdong province in China and intends to capitalize on this initial success to maintain a presence there.
Areva is 87 percent owned by the state, which gives rise to speculation that the government will orchestrate a rescue plan for the company. Reuters on Wednesday quoted French economic minister Emmanuel Macron as saying that Areva would have to outline its own restructuring plan before the state would consider intervening on its behalf.
Anonymous comments will be moderated. Join for free and post now!
