The company’s nuclear division reported an operating loss of €266 million in the first half of 2006, compared with a positive income of €32 million for the first half of 2005.
“Difficulties and delays stemming in particular from its status as the first reactor of its kind ever built and from the process, specific to Finland, of technical documentation approval by the customer and detailed design approval by the Finnish safety authority, which take place as the work progresses,” were to blame Areva says.
The company adds that the loss covers an additional estimate of the risks covering uncertainties over the project execution.
Internally, Areva has installed a new project director under the direct authority of the chief operating officer, and strengthened its support to suppliers.
Free operating cash flow before tax for the nuclear division is at -€190 million, compared with €163 million for the first half of 2005 and nuclear operations produced a first half 2006 revenue of €3,334 million, up by 1.6%. However, operating income was sharply down to €73 million, compared with €373 million for 2005, a €300 million discrepancy attributed to the OL3 EPR. Despite difficulties associated with the OL3 project, first half sales for the group as a whole rose to euro 5,036 million, up by 5.7% on 2005 figures.
Looking ahead, for 2006, Areva is predicting an operating income close to 2005, despite the significant impact of the OL3 contract, as contributions from other activities are expected to increase.
Nonetheless, analysts are understood to be disappointed by the performance, with the impact prompting some to recommend investors divest Areva stock.
Meanwhile, Areva, Washington Group International and BWX Technologies Inc. have jointly submitted expressions of interest to the US Department of Energy (DoE) for both the development and deployment of a Consolidated Fuel Treatment Centre and an Advanced Burner Reactor under the Global Nuclear Energy Partnership (GNEP) initiative.
The Consolidated Fuel Treatment Centre will reprocess used nuclear fuel while the Advanced Burner Reactor will be designed to use recycled nuclear materials as well as to consume minor actinides.
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