France Pressures Areva on Post-Fukushima Profits

OWNI has obtained a copy (available at the bottom of this article) of a four-page letter from the French Minister for the Economy, Finance and Industry, François Baroin, addressed to Jean-Cyril Spinetta, Chairman of the Supervisory Board of the French energy multinational and nuclear specialist Areva. The minister details the group’s disastrous financial results and sets out profitability targets that appear less than compatible with the lessons learned in the wake of the Fukushima disaster. With a negative cash flow following losses of over a billion euros for the years 2009 and 2010, Baroin presses for an acceleration “of efforts to redress the profitability” of the company, demanding a double-digit operating margin.

Speed, efficiency and profitability

The detailed schedules are clear: priority is to be given to partnerships with EDF, the second largest French energy company, and finances to improve the welfare of shareholders. The objectives set by the state take the focus away from safety, which is no longer the primary requirement. For the Minister, it’s essential to keep in mind:

in the face of the major challenges that have arisen post-Fukushima, the need to restore the profitability of the group to enable it to finance its development projects.

Specifically, the economic necessity is presented as “a high expectation of the state.” The management board must be willing to implement the recommendations “with little delay.” The fears of employees and their expectations of the strategic action plan, scheduled for mid-December, are understandable.

Baroin leaves no alternative but to make the group’s finances and strategic choices transparent:

Areva’s industrial strategy will aim to be decreased rapidly in a number of specific objectives, both quantitative and qualitative, for each operational unit.

The watchword: speed. Areva is caught in a vice, its only solution to obey ministerial orders.

Under these conditions [...] it appears even more essential to accelerate efforts to restore profitability. These efforts seem all the more necessary given that Areva must re-gather some financial leeway in order to pursue a more balanced investment policy, which is just as critical to its development over the long term. The management board must strive to achieve the new fixed objectives for 2012 and a double-digit operating margin as quickly as possible, and certainly by 2015 at the latest. The group must also apply greater transparency to itself with respect to its shareholders.

Baroin’s intentions are commendable. The French state, which owns more than 90% of Areva, is entitled to demand accountability. Meanwhile the other shareholders, smaller but nonetheless important, require results.

Illustration by Marion Boucharlat for Owni