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UPDATE 2-Areva warns of significant extra provisions for 2014
February 2, 2015 / 6:27 PM / 3 years ago

UPDATE 2-Areva warns of significant extra provisions for 2014

* New provisions on nuclear new-build and decommissioning

* Second half even worse than first; new writedowns planned

* New management to present roadmap on March 4

* Revenue down 8 percent with nuclear industry in doldrums (Adds CEO comments, order book data)

By Geert De Clercq

PARIS, Feb 2 (Reuters) - French nuclear group Areva warned on Monday that it expects to book a significant increase in provisions and writedowns of assets in its 2014 accounts.

Areva did not specify what the provisions were for, but spoke of “certain new builds”. Areva has already booked billions of provisions on the much-delayed Olkiluoto 3 reactor in Finland, its only major new-build project.

Areva also said it would write down industrial assets and increase provisions related to the decommissioning of nuclear installations.

“Taken together, these items would significantly downgrade net income for the 2014 fiscal year in relation to June 30, 2014,” Areva said in a statement.

The company said 2014 revenue fell 8 percent to 8.34 billion euros ($9.5 billion), slightly better than the 10 percent fall forecast in August, and reiterated that its new management would present a “strategic and financial roadmap” on March 4, when the company releases 2014 earnings.

Areva swung to a 694 million euro first-half loss as struggling utilities cut maintenance costs and the nuclear sector remained in the doldrums following the 2011 Fukushima disaster.

Chief Executive Philippe Knoche, appointed last month, said things got even worse in the rest of the year: “The year 2014, particularly the second half, was a hard one for Areva.”


In September, Areva said it expected Olkiluoto to come online late in 2018, almost a decade behind schedule. Work started in 2005 and had been expected to end by 2009.

In 2013, Areva took a 425 million euro provision on Olkiluoto, taking total provisions on the plant to 3.85 billion.

When the project was launched, its cost was estimated at 3.2 billion euros, but late in 2012, Areva estimated the overall cost would end up closer to 8.5 billion. Monday’s new warning could mean the cost might rise again.

It could also mean that Areva’s new management has decided to book provisions for a 1.8 billion euro claim over Olkiluoto’s delays and cost overruns from Finnish customer TVO.

TVO and Areva have traded accusations about who is to blame for the delays and extra costs. The International Chamber of Commerce’s (ICC) arbitration court is processing a dispute on cost overruns between the consortium building the plant and TVO.

In its 2013 accounts, Areva said it had not made provisions for the TVO claim as it considered the allegations baseless.

A rare bright spot in Areva’s statement was the increase of its order book to 46.9 billion euros from 41.4 billion at the end of 2013, mainly due to a nuclear fuel treatment and recycling agreement with utility EDF.

$1 = 0.8815 euros Editing by James Regan and David Clarke

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