Areva, the French nuclear technology giant, warned of an uncertain outlook for its business amid delays to important projects and sluggishness in the global atomic energy sector, sending its stock tumbling on Wednesday, reports The New York Times.
The company, which is about 87 percent state-owned, said late Tuesday that it was suspending its financial outlook for 2015 and 2016.
Areva cited cash flow problems related to its long-delayed nuclear plant project in Finland at Olkiluoto, as well as Japan’s reluctance to restart reactors after the 2011 Fukushima disaster. And it noted “the still lackluster market” for providing services to existing nuclear plants, including in its crucial home market, which draws about three-quarters of its electricity from atomic power, the highest in the world.
The project at Olkiluoto, an island on the Baltic Sea, was begun in 2005 with an expected start-up date of 2009. However, Areva and its partner in the project, Siemens, are mired in a multibillion-dollar legal battle over cost overruns and construction delays with the Finnish utility TVO, which commissioned the reactor. The current schedule shows 2018 as the soonest the plant could begin operating, but even that is in doubt.
Pierre Boucheny, an analyst at Kepler Cheuvreux, said that it was clear that Areva had been struggling in the current environment but that it now “looks more difficult than expected.”
With its most important projects running behind schedule, “everything is delayed,” Mr. Boucheny said, noting that the full range of services that Areva had been banking on, including the supply of nuclear fuel, had been set back, hurting the company’s expected earnings.
The company will burn through more than 400 million euros, or about $500 million, of cash this year, he said, and might need to raise as much as 2 billion euros in new capital to shore up its finances.
In a related announcement late Tuesday, EDF, the French power utility that regularly teams up with Areva, said its Flamanville 3 nuclear project in northern France would be delayed by another year because of Areva’s difficulties in delivering essential components. Started in 2007, the Flamanville plant was supposed to have been generating electricity for the French grid in 2012.