French Nuclear Group Areva Cuts Forecasts
Shares of French nuclear group Areva dropped 12 percent after the firm posted a first-half loss and cut its earnings targets as its struggling utilities customers reduced costs and the nuclear sector remains in the doldrums.
Areva also terminated its concentrated solar power activity, which generated about 100 million euros ($134 million) in revenue per year but made tens of millions of losses. About 100 jobs will be cut in the United States and in India, a company spokesman said on Friday.
Chief Executive Officer Luc Oursel said in a statement that the nuclear market environment had further deteriorated as construction projects for new reactors abroad and reactor overhaul operations in France have been delayed.
A company spokesman told reporters that as a supplier to the utilities industry - which is suffering from overcapacity and slack power demand - Areva is feeling the impact of its customers' efforts to cut costs.
The firm made a 694 million euro first-half loss after just breaking even in the same period in 2013. The firm booked a 305 million euro operating loss, reversing income of 290 million, and wrote down 373 million on discontinued operations.
Revenue fell 12.4 percent to 3.89 billion euros and earnings before interest, tax, depreciation and amortisation (EBITDA) more than halved to 226 million euros from 487 million.
For 2014, Areva expects revenue will fall 10 percent. At the publication of 2013 earnings in February, it had forecast a 2 to 5 percent drop.
Areva, which is 87 percent state-owned, also cut its forecast for free operating cash flow before tax to "close to breakeven" in 2014 and 2015, and "distinctly positive" in 2016. In the first half, it stood at 71 million euros, versus a cash burn of 158 million in the first half of 2013.
In February, the firm forecast positive pretax free cash flow for 2014 and a "significant increase" in positive free operating cash flow before tax for 2015-16.
The firm maintained its forecast for organic revenue growth of around 4 to 5 percent per year in 2015-16. (1 US dollar = 0.7470 euro)
(By Geert De Clercq)
