Areva 2006 profits slide on Finland provisions

Thursday, March 22, 2007

Thu Mar 22, 2007 1:30pm EDT
PARIS, March 22 (Reuters) - Areva, the world's biggest maker of nuclear reactors, posted a 38 percent drop in 2006 net profit on Thursday, hurt by a divestment and provisions linked to delays in a power plant project in Finland.

But the French group, which is currently involved in a $1.5 billion takeover battle for German wind turbine maker REpower, predicted strong growth in 2007 revenues and operating income, thanks to a 24.6 percent rise in the group's order backlog to 26.6 billion euros ($35.58 billion).

"Areva confirms the profitable growth objectives it has set for itself," Chief Executive Anne Lauvergeaon said in a statement.

Areva, whose activities cover the full nuclear energy cycle from mining to waste, posted a 2006 net income of 649 million euros, down from 1.049 billion in 2005, beating the average forecast of 469 million from a Reuters poll of eight analysts.

Net income was up 43.9 percent when excluding net profit from discontinued operations such as the connectors business it sold last September, Areva said.

Operating income fell to 407 million euros from 551 million in 2005.

Areva had already posted a 7.3 percent sales rise overshadowed by delays in the construction of the Olkiluoto 3 power plant commissioned by Finland's Teollisuuden Voima (TVO).

Areva has said that it and Siemens would not accept full responsibility for the delay. Provisions related to the Finnish project pushed Areva's reactors and services division to an operating loss of 420 million euros, against an operating profit of 87 million in 2005.

The group's other businesses showed higher profits, with operating income at its key transmission and distribution business -- which supplies systems used to transform and deliver power -- coming in at 191 million euros, after a loss of 61 million euros in 2005.

Areva's front-end business -- prospecting and mining ore and turning it into nuclear fuel -- posted a 21.9 percent rise in operating profit to 456 million euros, helped by higher uranium prices and a rise in volumes of ore delivered.

The company proposed paying a dividend of 8.46 euros per share or share certificate, down from 9.87 euros last year.

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