(Repeats to additional subscribers)
* Areva issues fifth profit warning in seven months
* New management team to present strategy on March 4
* 4.9 bln euro loss due to Olkiluoto and other writedowns
* First major bond repayment due Sept 2016
(Adds energy minister comment, possibility of dissolution)
By Geert De Clercq
PARIS, Feb 23 French state-controlled nuclear
group Areva expects a 2014 net loss of about 4.9
billion euros ($5.6 billion), hit hard by charges on assets
including a much-delayed reactor in Finland.
Areva's profit warning on Monday, the fifth in seven months,
comes ahead of the presentation of a new strategy to reduce
debt and restore profitability on March 4 when Areva releases
detailed results for last year.
CEO Philippe Knoche and Chairman Philippe Varin, appointed
in January, will lay out how Areva can survive an industry
slowdown following the 2011 Fukushima disaster and fierce
competition from Russian, Japanese and South Korean firms.
They also need to find a solution for Finnish reactor
Olkiluoto, years behind schedule and way over budget. Areva and
its Finnish customer Teollisuuden Voima have lodged claims worth
billions of euros against one another in the International
Chamber of Commerce's arbitration court.
Energy Minister Segolene Royal said on Monday France is
studying all options for 87 percent state-owned Areva and wants
closer cooperation between state-owned energy firms.
"We want to create a strong nuclear industry by creating
synergies, and this is very new, between Areva, EDF and state
nuclear energy agency CEA," she told reporters.
Two weeks ago, EDF said there is no question about
making a financial investment in Areva.
Knoche and Varin will also need to cut Areva's debt, which
stands at 5.77 billion euros according to Thomson Reuters data.
With a 975 million euro bond due in September 2016, the new
team has at best 18 months to cut costs and sell assets before
it could be forced to ask the state for new capital. Some think
it could be sooner.
"The new loss is bigger than Areva's market value. This will
force Areva to announce a new capital increase soon," John
Plassard of Mirabaud Securities told Reuters.
Since the loss would also be bigger than Areva's
shareholders' equity, it could also be large enough to force the
firm into convening an extraordinary general meeting to decide
on its possible dissolution.
At the end of June, Areva had net cash of 2.3 billion euros
and undrawn credit lines of over 2 billion, but raising capital
in the market is virtually impossible, as Areva's debt was
downgraded into junk territory in November.
Its shares are down 55 percent over the past 12 months and
fell another 1.5 percent on Monday.
With few non-core assets left to sell, Areva will have to
make painful choices. These could include ditching the firm's
business model of an integrated nuclear group that mines
uranium, makes nuclear fuel, builds reactors and reprocesses
Given the delays on Areva's EPR reactors and the fact that
EDF is one of the few customers left for waste processing,
Areva's mining business is virtually its only marketable asset.
It could interest China, which has the world's largest nuclear
Unions also fear job cuts at Areva, which employs 45,000.
"It looks like the new plan will involve salary reductions
and job cuts," said Bruno Blanchon of the CGT union.
Areva said on Monday new impairment charges included its
uranium conversion plant Comurhex II plant in southern France
and warned of further provisions on renewable energy contracts.
($1 = 0.8798 euros)
(Additional reporting by Emmanuel Jarry, Alexandre
Boksenbaum-Granier and Julien Ponthus in Paris and Robert Smith
in London; editing by Keith Weir)