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A general view shows the chimney of the Areva combustible fabrication plant in Saint-Paul-Trois-Chateaux.

BENOIT TESSIER/BENOIT TESSIER/REUTERS

Areva Group delivered a whopping great profit warning yesterday. The Fukushima accident is not the only, or even the biggest, cause of the French nuclear reactor maker's financial woes. But it was the trigger for €2.4-billion ($3.2-billion) of writedowns and a restructuring that have been hanging over the company for months. Chief executive officer Luc Oursel has a tough job to turn this industry behemoth round.

Some €1.5-billion of the writedowns relate to mining projects in southern Africa operated by Areva's UraMin uranium division. However, investors should be more worried about the €800-million of writedowns attached to Areva's core nuclear division – including a further €150-million at the new-generation European pressurized reactor being built in Finland. The combined writedowns will push the state-controlled group into an operating loss of between €1.4-billion and €1.6-billion for 2011. That compares with current consensus analyst forecasts of €1-billion, according to Bloomberg data.

Mr. Oursel suggests that revenue growth at Areva could slow during the next two years, to between 3 and 6 per cent. Between 2009 and 2010, it grew 5.1 per cent. He has identified about €1-billion in annual cost savings to be targeted by 2015 and disposals of €1.2-billion.

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Fine. But that may not stem the worst the industry can throw at it just now. Germany and Switzerland are preparing to abandon nuclear power in the wake of the Fukushima accident and Italy has decided to shun nuclear entirely. China has suspended approvals for new plants, while France's commitment to nuclear power has become a contentious issue in advance of next year's presidential election. Areva's shares have halved in value this year, and they still look overpriced given the clouds hanging over the industry. Mr. Oursel's medicine has a lot to cure.

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