France's state-controlled nuclear giant Areva announced plans Tuesday to cut jobs and suspend projects around the world as part of a five-year turnaround plan, aimed at returning to profit after posting a massive financial loss in 2011.
Areva's new chief executive Luc Oursel told a meeting of financial analysts that Areva plans to cut up to 1,500 jobs in Germany and has suspended a controversial nuclear enrichment plant project in Idaho in the U.S. in a bid to offset losses this year that could reach euro1.6 billion ($2.12 billion).
Oursel said that the German job cuts were necessary following the German government's decision to shut down eight nuclear reactors and progressively phase out the remaining nine reactors between 2015 and 2022.
Germany represents 6 percent of Areva's order book of euro44 billion.
Areva will not resort to mass layoffs in France but has instated a hiring freeze on support jobs such as information technology. Areva employs 8,000 people in support functions, including 6,000 in France. French support employees retiring or leaving the company for other reasons will not be replaced, Oursel said. He declined to put a figure on the number of jobs this policy could eliminate from the group's headcount.
At the same time Areva is suspending a number of projects around the globe, including the Eagle Rock Enrichment Facility near Idaho Falls.
Areva won a U.S. license to build and operate the planned $3 billion gas centrifuge uranium enrichment plant in Idaho in October, a key step in the company's plans to expand production of nuclear fuel in the United States.
The plant would have been used to enrich uranium for use in the manufacture of nuclear fuel for commercial power reactors and was planned to be in operation by 2014. A final decision on the project had been on hold pending the review of Areva's capital investments undertaken by Oursel and his new management team. Oursel took the helm in June.
Oursel said Areva would cut its total investments by 34 percent to euro7.7 billion over the 2012-2016 period, down from euro11.6 billion over 2007-2011.
Areva's shares rose 1.1 percent to euro19.41 in midday trading on the Paris stock exchange.
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.
Oursel's five-year turnaround strategy for the company is aimed at slashing its operating costs by up to euro1 billion annually by 2015.
The company said its 2011 results will 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.
The company forecasts the global installed base of nuclear reactors will grow to 583 by 2030 from 378 last year. That represents a decrease from Areva's forecast last year that the installed base would grow to 659 over the next 20 years.
That was before the March 11 earthquake and tsunami that destroyed Japan's Fukushima nuclear plant's power and cooling systems, in the world's worst nuclear disaster since Chernobyl.
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.