Shares dive in nuclear firm Areva

PARIS: Areva’s share price plunged after the struggling French nuclear giant announced it was suspending its outlook for the next two years.
As of 11:30 a.m. (1030 GMT) the value had fallen 15.6 percent to 10.23 euros in otherwise flat trading on the CAC 40.
Trading in the company — 87 percent owned by the French state — was suspended on Tuesday after it announced it was throwing its forecasts out the window.
It said problems with cash flow, the timetable for restarting Japanese reactors, pushed-back plans for building new reactors, and lackluster conditions in France were behind its decision.
According to the French business magazine Challenges, the government is considering injecting 2.0 billion euros ($2.5 billion) into the company.
It is also mulling the creation of an entity “to park and externalize ultra-losing activities,” it said.
Areva’s stock, which is at its lowest since June 2012, had been under pressure for several months and has lost half its value since the beginning of the year. It already dropped 20 percent on August 1 when it announced a lower forecast for 2014.
Worldwide, interest in nuclear power has cooled since the March 2011 Fukushima catastrophe in Japan.
In October, Areva said it would cut investments and step up sales of non-strategic assets in a bid to shore up finances.
It also named chief operating officer Philippe Knoche as interim chief executive after CEO Luc Oursel stepped down citing health reasons.
A general assembly is due on December 9.
In addition to financial and operational problems, Areva is overhauling its corporate governance.
The dumping of Areva’s forecasts came as energy group EDF confirmed that it would delay until 2017 the launch of a new-generation EPR reactor designed by Areva that is under construction in the northern French town of Flamanville.
Areva said that because of operational delays some client payments could not be expected until next year.
“Areva is undertaking a review of its strategic outlook and mid-term funding plan, which will be examined in the framework of its governance,” it said in a statement.
“Areva is suspending its financial outlook for 2015 and 2016,” it said, noting delays in work on an EPR reactor in Finland and in restarting nuclear plants in Japan.
“Their reasons are many and recurring,” a Parisian stock broker said, noting the operational delays and “reticence vis-a-vis the international nuclear market, both for the construction of new plants and the market for recycling (nuclear fuel).”
He added: “The situation is such that Areva has begun a strategic revision... ahead of the governance changes,” which “might be radical.”
Philippe Varin, former chief of French car giant Peugeot, is reportedly tipped to head Areva’s new board of directors after the overhaul.
Analysts at French bank Societe Generale said the timing of Areva’s announcement was “surprising” coming after it published dismal third quarter sales figures.
They said the company was at a “high risk” of a credit downgrade to BB+, adding: “It seems clear that Areva will require a cash infusion in the near term.”