Areva will no longer be concerned with working across the entire nuclear power sector and will focus on supplying nuclear reactor components.

New chief executive Philippe Knoche told the FT that the company willno longer lead high profile new build projects and is most likely from hereon in to be focusing on the company’s expertise in developing core nuclear steam supply systems.

Philippe Knoche also said part of the new strategy involved “clearly to work with EDF” or other groups to focus on supplying reactor components.
Philippe Knoche
Areva reported a €4.8bn loss for 2014 last month, prompting the Socialist government of President François Hollande to call for it to forge closer ties with EDF, its main customer which operates France’s 56 nuclear reactors and which is also state-controlled.

Knoche said recent results will have no impact on commitment to its key projects, saying that there were “positive signs” that the Finnish project was getting back on track. He added that he had no intention of pulling out of the Hinkley Point reactor project in the UK of which Areva has a 10 per cent stake.

The company is delivering nuclear steam supply systems and control systems for the reactor, which is much more in line with the kind of programmes they want to do in the future.

“Our commitment to Hinkley cannot be questioned in any manner,” he said.

Overall though, Mr Knoche’s comments represent a lowering of ambitions for a group that since the early 2000s attempted to become a participant across all areas of the nuclear industry, from uranium mining to building big new power plants.

The big loss last year reflected severe cost overruns at its long-delayed Finnish reactor, where it has played a leading role.

Mr Knoche said new-build projects represented “most of our debt and losses” over the past decade, but only 8 per cent of revenue. He said he wanted the company to “focus more on its core business” in the nuclear supply chain as a result.

Part of the new strategy will be to work more closely with EDF, letting the big utility take the lead on large new-build projects.

Mr Knoche said that Areva was also caught out by the downturn in nuclear demand following the Fukushima disaster in Japan in 2011, saying, “Internally we should have reacted faster.”

The company has now promised annual cost savings of €1bn over the next three years as well as lower capital spending. He acknowledged that some kind of a capital raising was also on the table. Analysts estimate that the company has a hole of about €2bn.

Mr Knoche insisted that the company had a solid future despite its troubles. Areva expects to win a significant part of EDF’s €55bn budget to extend the lifespan of the utility’s French reactors. It also has a large installed base, servicing more than 350 of the 440 operating reactors worldwide.