French nuclear giant Areva to post large loss

AP News
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Posted: Dec 12, 2011 12:00 PM
French nuclear giant Areva to post large loss

France's state-controlled nuclear engineering giant Areva said Monday it will post a massive full-year loss in 2011 because it had to set aside more than euro2 billion ($2.65 billion) to deal with the impacts of a troubled mining project in Namibia and Japan's Fukushima nuclear disaster in March.

Areva said it expects to make an operating loss of between euro1.4 billion and euro1.6 billion this year, compared to a profit of euro883 million in 2010.

Areva's new chief executive, Luc Oursel, is scheduled to present Tuesday a five-year turnaround strategy for the company aimed at slashing its operating costs by up to euro1 billion annually by 2015.

The company said its 2011 results would include euro2.36 billion in financial charges, including euro1.46 billion for the Namibia mining operation and other projects undertaken in the Central African Republic and South Africa by Areva subsidiary UraMin.

Areva said its board of directors has set up a special committee of three independent supervisory board members to probe the company's 2007 acquisition of UraMin "in light of the significant amount of impairment" being recorded in its 2011 results.

Areva said its earnings would also be hurt by a drop in the number of new reactors being built around the world following the Japanese nuclear disaster. This will also depress the price of uranium, which will have further negative impacts on Areva's earnings, the company said.

Oursel took over from long-time Areva boss Anne Lauvergeon last July after the executive known as "Atomic Anne" lost support within the French government, which owns nearly 75 percent of Areva's capital. His turnaround for the loss-making nuclear giant also calls for achieving 5-8 percent revenue growth per year in Areva's nuclear business by 2015.

Areva shares had been suspended on the Paris stock exchange for much of Monday after Industry Minister Eric Besson told a French radio station Sunday night that Areva was preparing to announce large losses.

The shares resumed trading Monday afternoon and closed down 0.9 percent at euro19.45.