Nuclear meltdown

Areva holders pay for years of state blunders

Areva had many reasons to drop its financial targets for the next two years. Shares of the French nuclear plant maker tanked after it said it was abandoning its free cashflow objectives and would soon review its strategy. The French state owns nearly 90 per cent of the group, which limits the damage to outsiders. Whatever the immediate causes of the profit warning, this should be an opportunity to review the long series of industrial and political blunders that caused the debacle.

The announcement came a week after the government fired Areva's Chairman Pierre Blayau, without bothering to offer an explanation. He will be replaced at the next assembly by Philippe Varin, former chief executive at carmaker Peugeot. Areva's previous chief executive had retired a few days earlier for health reasons. Varin will have to find a chief executive - under heavy government influence.

The state's overbearing presence raises the question of why the company was ever listed. Areva is a bizarre animal, dealing in everything from uranium mining to nuclear plant engineering, and now renewable energy. As France's only uranium processor, it also dabbles in strategic and military matters that have no real place on the stock exchange.

Yet it is quoted, thanks to the ineptitude and poverty of the French state. About a decade ago, the company needed more money for capital expenditure than the government was able and willing to provide, while privatisation was ruled out. So the group had to rely on asset sales, strategic shifts, and odd fund-raising methods, such as a capital hike reserved for Kuwait in 2010. The stock market listing came in 2011.

Then there was the Finnish debacle. Areva's EPR, the first of a new generation of pressurised water reactors, has been plagued by repeated delays at a multibillion-euro cost to the company. And French utility EDF said this week that the second EPR plant, which it will operate in France, won't be ready on schedule. That won't help foreign sales.

Optimists could say that the current government acted swiftly to clean up the Areva mess. Realists would be right in thinking that the meddling goes on.