The growth engines for first quarter revenue were the reactors & services division and the transmission & distribution division, with growth of 9.2% and 16.1% respectively.
Currency translation had a positive impact of EUR57 million over the quarter. Changes in the consolidation scope had an impact of EUR66 million, primarily due to the consolidation of acquisitions made in 2008 in Transmission & Distribution and in Renewable Energies.
Orders were steady in the first quarter, particularly in the Front End, which posted several significant contracts with US and Asian utilities, and in Transmission & Distribution, with orders up sharply in Asia and South America.
As of March 31, 2009, the group’s backlog reached EUR49.5 billions, for 28.3% growth year-on-year, including 31.3% growth in Nuclear and 10.2% in Transmission & Distribution.
For the year as a whole, the group confirms its outlook for backlog and revenue growth as well as rising operating income.
Comments on revenue growth by division: revenue in line with backlog execution
Front End division
The Front End division reported stable revenue in the first quarter of 2009 compared with the first quarter of 2008, at EUR674 million (-6.3% LFL1 due to the timing of sales over the quarter not indicative of the annual level of business). Currency translation had a positive impact of EUR41 million.
In Mining and Enrichment, sales were down compared with the first quarter of 2008, mainly due to the calendar effect.
In Fuel, the timing of deliveries had a positive impact, particularly in France.
Reactors & Services division
Revenue for the Reactors & Services division was up 9.2% (+2.6% LFL1) to EUR727 million. Currency translation had a positive impact of EUR24 million. Changes in the consolidation scope had a positive impact of EUR19.3 million, mainly from the consolidation of Koblitz in biomass.
In Plants, recurring operations were solid in France, Germany and US, particularly in engineering and upgrade projects for the installed nuclear base. The contribution to revenue from major EPRTM reactor projects was similar to that of the first quarter of 2008, while that of the Generation II Dalian and Ling Ao projects in China is declining, consistent with the project completion schedule.
In Nuclear Services, the calendar effect was favorable in Germany in the first quarter of 2009, whereas scheduled reactor outages are taking place later in France and US than in 2008.
Back End division
First quarter 2009 revenue for the Back End division rose 3.3% (+2.0% LFL1) to EUR416 million.
In Recycling, foreign contracts contributed favorably to Melox operations;
The contribution from Logistics was down from the first quarter of 2008, which was particularly high in storage in the United States and in transportation.
Transmission & Distribution division
Revenue for the Transmission & Distribution division rose to EUR1.186 billion at the end of March 2009, for growth of 16.1% (+12.4% LFL1). Changes in the consolidation scope had a positive impact of EUR46.4 million in the first quarter of 2009, largely offsetting the EUR12.4 million negative impact of currency translation.
Revenue growth was fueled mainly by the Near East and the Middle East, as well as by North America.
Orders were down 7.2% in the first quarter of the year (-9.2% LFL1), at EUR1.472 billion. The slowdown concerned the Near East, the Middle East, Southern Europe and Russia.
However, orders were up sharply in Asia (+82%) and in South America (+57%). The division won several significant contracts in the first quarter, particularly from Hindalco Industries Ltd of India in the aluminum sector (around EUR80 million) and with the South Korean utility Kepco in the HVDC field (close to EUR80 million), confirming its strong position in ultra high voltage direct current power lines.
As of March 31, 2009, the division’s backlog stood at EUR5.949 billion, a 4.1% increase from December 31, 2008, and a 10.2% increase year-on-year. Cancellations linked to the economic crisis represent less than 3% of backlog.
Information to assess the group’s performance and financial structure
The principal factors influencing the group’s first quarter 2009 operating performance are as follows:
Uranium prices dropped, slowing the increase in the average sales price and leading to greater selectivity in mining investments;
On the OL3 project in Finland, civil works progressed, with the placement in late March 2009 of the final components of the reactor building’s metal containment liner in preparation for placement of the reactor dome, scheduled for late August 2009.
Manufacturing of reactor coolant system components is progressing, including the receipt of the first steam generator and completion of the first primary coolant pump tests on the Jeumont test loop. In addition, in-plant mechanical testing of the polar crane was launched, with installation at the site scheduled for August 2009;
Construction of the EPRTM reactors at Flamanville, France, and Taishan, China, is proceeding according to the project schedules;
In Transmission & Distribution, the crisis is affecting countries and market segments differently. Distribution is affected by the slowdown in the real estate market and by the sudden halt in industrial investment. Business is strong in the Transmission business, offering opportunities linked to government-sponsored economic stimulus plans and to the increased share of renewables in the energy mix.
First quarter 2009 events with an impact on the group’s financial position are as follows:
As previously announced, SIEMENS informed AREVA of its decision to withdraw from AREVA NP. Following the announcement, and in accordance with the shareholders’ agreement of January 30, 2001, the AREVA and SIEMENS teams opened discussions and defined a process to set the terms and schedule for share valuation. This process is taking its course;
AREVA teams are implementing the 600 million euro cost reduction program announced during the presentation of the annual results, with 40% progress made on identified purchasing performance actions and a reduction of overheads in line with objectives;
At the same time, actions to reduce the working capital requirement by EUR300 million are continuing, with particular emphasis on inventory reductions in the Front End and in Transmission & Distribution, and on optimization of project cash flows.
Important operations and events during the period
In terms of strategy and production, several significant events occurred during the quarter:
AREVA signed a memorandum of understanding with the Indian utility NPCIL related to the construction of two to six EPRTM reactors at the Jaitapur site in the state of Maharashtra. The MOU lets technical cooperation begin between NPCIL and AREVA and provides for fuel supply throughout the operating life of the reactors;
In renewable energies, AREVA signed a memorandum of understanding with Wetfeet Offshore Windenergy GmbH to supply eighty M5000 wind turbines to the GlobalTech I wind farm, for a total of more than EUR700 million;
AREVA signed a mining cooperation agreement with the Democratic Republic of the Congo related to exploration for and future operation of uranium deposits.
AREVA signed an agreement with the Japanese companies Kansai and Sojitz for their acquisition of a 2.5% equity interest in SET, the holding company that operates the Georges Besse II enrichment plant;
The President of France announced the construction of France’s second EPRTM reactor;
The utility ENEL announced that it intends to develop, with EDF, a fleet of at least four EPRTM reactors in Italy;
