Areva expects losses after extra Olkiluoto provision
24 June 2010
An extra provision of some €400 million ($491 million) for the Olkiluoto 3 construction project in Finland means that French nuclear group Areva expects to post an operating loss for the first half of 2010.
In an update on its 2010 income outlook, Areva said that the extra provision for the construction of the first-of-a-kind EPR corresponds to a new completion schedule submitted earlier this month to customer Teollisuuden Voima Oyj, (TVO). The schedule sees most of the works completed by the end of 2012, with electricity production beginning in 2013. The original fixed-price contract for the unit, signed by TVO with the Areva-Siemens supplier consortium in December 2003, was for €3.2 billion ($3.9 billion) but the project has been victim to considerable cost overruns.
The turn-key contract under which the Areva-Siemens consortium is supplying the unit sees the supplier responsible for the project schedule as well as for constructing and commissioning the plant. Earlier this week the reactor pressure vessel for the unit was put in place.
Another factor that stands to affect Areva's performance is the shutdown of the Georges Besse I gaseous diffusion uranium enrichment plant. The plant, operated by Areva subsidiary Eurodif, is scheduled for closure as it is being replaced by the Georges Besse II centrifuge plant, currently being built by another Areva subsidiary, Société d'Enrichissement du Tricastin (SET). The first stages of Georges Besse II began operation in 2009, but according to Areva, negotiations are still ongoing with Electricité de France (EdF) on conditions for the shutdown of Georges Besse I.
Nonetheless, excluding the additional provision on Olkiluoto 3 and the possible impact of shutdown conditions for Georges Besse I, the group's operating margin for the first half of 2010 should be around 4%. Net income will be up compared to the same period in 2009 because of gains of €1.3 billion ($1.6 billion) from the sale of the Areva's transmission and distribution business to Alstom and Schneider Electric earlier this year.
The group's order book currently has a backlog worth €43 billion ($53 billion), of which €500 million ($613 million) has been added in the first half of 2010.
Areva will release its 2010 first half results on 30 July.
Researched and written
by World Nuclear News