AREVA Announces Plan to Cut Costs Following $5.4B Loss in 2014 - ExchangeMonitor

Jeremy L. Dillon
NS&D Monitor
3/6/2015

Following a $5.4 billion loss for 2014, AREVA this week announced plans to cut costs and re-focus the company on core business. The plan calls for AREVA to refocus on core nuclear processes, re-forge the partnership with EDF, and strengthen the development of its presence in China in an effort to right the ship. The cost cuts should result in savings of $1 billion by the year 2017 and result in positive cash flow, the company said. “The scale of the net loss for 2014 illustrates the twofold challenge confronting AREVA: continuing stagnation of the nuclear operations, lack of competitiveness and difficulties in managing the risks inherent in large projects,” AREVA CEO Philippe Knoche said in a statement. “The group understands how serious this situation is. A comprehensive strategic review of operations was undertaken beginning in November 2014 and is being carried out without compromise. As a result, AREVA is now able to announce a solid transformation plan that sets a challenging but economically realistic course for our teams.”

AREVA diagnosed its trouble as a result of pushback from the Fukushima disaster in Japan, which resulted in the shutdown of plants in Japan and Germany, as well as a down economic market for nuclear. “Following the difficulties generated by the Olkiluoto 3 project in Finland, the acquisition of UraMin in 2007 and the Fukushima accident in 2011, throughout 2014 the group coped with, among others, a deterioration of the economic situation (no reactor restart in Japan, lower price levels in uranium, conversion and enrichment, decrease of utility maintenance budgets, end of HEU and waste packaging contracts),” the company said in a release. “At the end of 2014, the group’s performance was burdened by the recurring difficulties encountered on three major projects, by insufficient profitability levels in most businesses faced with declining revenue and a changing product mix, and by additional losses related to its renewables operations.”

In the U.S., AREVA North America does not anticipate major changes in its Department of Energy work, but like the rest of the company, it expects to manage costs and look for cost efficiencies. AREVA is a partner with CB&I on the Mixed Oxide Fuel Fabrication Facility being built at the Savannah River Site. “AREVA Inc. in North America has been and will continue to manage costs and strengthen our business operations as part of AREVA’s global transformation plan,” AREVA spokesman Curtis Roberts said in an email. “We have taken measures in the past couple of years to adapt to the changing market by achieving cost efficiencies, optimizing our business organization, pursuing emerging opportunities in our core businesses, and aligning our workforce with the changing needs of our customers. AREVA remains a strong leader in the U.S. market, and focused on our near- and long-term ability to deliver innovative products and services that help ensure the safe and efficient production of U.S. nuclear energy.” Roberts added, “There will be no impact on AREVA’s commitment to or on-going work at MFFF or on any other DOE contract.”

BURBANK, Calif. — Former National Nuclear Security Administration Administrator Jill Hruby said the U.S. government needs to rebuild its understanding of nuclear weapons’ effects as it weighs deterrence in a changing strategic environment involving Russia, China and other nuclear-armed states.

At the third annual Outrider Nuclear Media Summit, held Oct. 22-23 at Warner Bros. Studios, Hruby called for restoring the nation’s “nuclear IQ,” saying “just building a lot of weapons over the long run does not seem like a winning strategy.”

During Russia’s full-scale invasion of Ukraine, she said, officials in senior government roles had little grasp of how a weapon’s size, detonation location and burst height would affect damage. Those differences matter when considering a proportionate response, Hruby said. She recalled using unclassified tools to explain potential effects.

Hruby said the U.S. cannot deter two nuclear-armed peer adversaries through weapons numbers alone. “If everybody needs the same number of nuclear weapons and there’s two against one, it just doesn’t work,” she said. “There’s no math that makes that work.”

A broader deterrence strategy should include cyber and conventional capabilities, economic ties and direct communication. “We desperately need to talk to each other. We need hotlines,” she said.

Hruby also addressed the need to refurbish an aging U.S. stockpile and rebuild capabilities that had diminished after the Cold War. Responding to criticism from Greg Mello, executive director of the Los Alamos Study Group, that modernization risks a new arms race, Hruby said officials had not weakened safety, security or environmental standards to speed the work.

On AI regulation, Hruby, who serves on Anthropic’s National Security and Public Sector Advisory Council, questioned whether technical guardrails can adequately manage systems whose behavior is not fully understood. She cautioned that transparency from AI companies is no substitute for meaningful oversight. “We have to be very, very serious about that,” she said.

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