Areva plans to cut 6,000 jobs worldwide

Struggling French nuclear equipment giant Areva SA is planning to slash thousands of jobs to cut costs due to mounting losses on falling demand for nuclear energy worldwide.

The company said in a statement that it has initiated talks with labour organisations aiming to take immediate measures to save €1 billion by 2017 consistent with the company's competitiveness plan announced in March.

It is believed that 5,000 to 6,000 jobs are at stake worldwide with about 3,000 to 4,000 of them in France. Currently, Areva has around 44,000 employees in its payrolls in 30 countries.

The company, which is 87-per cent owned by the French government, had said earlier that it would cut capital expenses and sell non-core assets in a bid to shore up finances.

In 2014, Paris-based Areva reported a huge €4.8-billion loss compared to a €494 million in 2013, its fourth annual loss in a row. Revenue was down over 7 per cent at €8.3 billion from €9.1 billion last year.

The company's net debt has increased by €1.3 billion to €5.8 billion during the period.

Philippe Knoche, chief executive officer of AREVA said, ''AREVA must begin immediately with its competiveness plan. Whatever may be the options chosen to implement the strategic roadmap and define the financing plan, it is urgent to take the necessary measures to adapt the costs of our business to the reality of its markets.''

The company aims to reduce labour costs by 15 per cent in France and 18 per cent worldwide through job cuts, compensation, and organization of work time.

Citing a company spokeswoman, The Wall Street Journal reported yesterday that Areva is already negotiating with the unions to cut payroll through voluntary retirements.

Over the past few years, Areva has been suffering from losses due to huge cost overruns at its two mismanaged projects in Finland and France, and the fallout from the Fukushima nuclear catastrophe in Japan in 2011, which prompted Japan and Germany to shut down its nuclear reactors and the weak nuclear energy market.

To overcome the crisis, the government had suggested Areva to work with another state-controlled firm Electricite de France (EDF) to find out a solution including sale of some of its assets to the power utility.

Citing unidentified sources, Bloomberg reported yesterday that EDF is working on a proposal to acquire the nuclear reactor and engineering business of Areva. The reactors and services division may be valued at €1.5 billion ($1.7 billion) to €3 billion and the engineering division could fetch about €300 million, the sources said.

Negotiations on a possible deal are in progress which could be unveiled in the coming weeks, although no final decision has been made, according to the people.

France, which relies on nuclear power to meet three-quarters of its energy needs, is in favour of an acquisition of the businesses by EDF, the utility giant that runs the country's 58 nuclear reactors as well as plants in the UK.

Areva is also mulling the option of selling its engineering business and divesting stakes in Areva NP to Chinese and other investors. Selling minority stakes in the company's uranium mines is also under consideration.