French nuclear energy giant Areva warned Monday its 2011 operating loss may top 1.6 billion euros ($2.1 billion) as the Fukushima nuclear disaster hit the value of its mining assets, and launched a major cost-cutting drive.
Announcing 2.4 billion euros in provisions, Areva said it planned to sell 1.2 billion euros in assets, slash investments by one-third over the next five years to 7.7 billion euros and squeeze costs to regain its competitive footing.
"To improve economic competitiveness, the group identified and will implement a series of initiatives aimed at reducing operating costs (up to one billion euros in annual savings targeted by 2015 i.e. about 10 percent of the cost basis)," it said in a statement.
It did not announce how its "Action 2016" plan would affect employment.
Areva is a world leader in the field of nuclear energy but the outlook for the sector has been clouded by a switch in sentiment in some countries, notably in Germany, in the light of the disaster at Fukushima in Japan.
Areva, in which the French state has a majority holding and is considered a jewel of French industry, said it nevertheless still expects organic revenue growth of 3.0-6.0 percent next year leading to operating earnings of 750 million euros.
Operational earnings should hit 1.25 billion in 2013.
"Considering the expected growth in electric consumption, Areva is convinced that the outlook for nuclear and renewable energy development remains strong in the coming years, even if expansion of the global installed base of nuclear reactors is postponed to a certain extent compared with forecasts available before the Fukushima accident," chief executive Luc Oursel said in a statement.
The main provision concerned a 1.46-billion-euro charge for its 2007 acquisition of UraMin, which including previous write downs wipes out the 1.8 billion euros it paid in 2007 for the mines in Namibia, the Central African Republic and South Africa.
The provision includes charges due to a later start up of the mines due to lower demand in the wake of the Fukushima accident, a lower expected sale price, and increased development costs as the sites may not be as rich in uranium as thought.
Some 100 million in charges related to impairment of value of production sites due to reduced workload following Fukushima.
Another 800 million euros in provisions were taken for contingencies and expenses that may entail future cash outflows, including 150 million euros for the behind schedule construction of a latest generation nuclear reactor in Finland.