paris europlace 2007installed nuclear generating capacity set to increase 61 worldwide zrising...
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Alain-Pierre RaynaudChief Financial Officer
AREVA
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AREVA AREVA atat a a glanceglance
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Breakdown of AREVA sales in 2006 (€10,863 MM)
AREVA is Nr 1 in Nuclear and Nr 3 in T&DAREVA is Nr 1 in Nuclear and Nr 3 in T&D
66%
N°1 worldwide in Nuclear€7.1 Bn
2006 market size:€25 Bn
Market share: 28%
34%
N°3 worldwide in T&D2006 market size:
€43 Bn
Market share: 9~10%( vs ABB: 24%, Siemens 18%)
€3.7 Bn
Geographic sales
33%
7%14%
29%
France
Europe (Excl. France)
Americas
Asia
Other
17%
2006 Sales by business
• No.1 in Europe and the US• No.1 in Plants / Fuel• No.1 in the Back End
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ChemistryEnrichment
Fuel fabrication
Reactors
Other sourcesof electric power
TransmissionDistribution
Spent fuelmanagement
RecyclingMox fuel fabrication
Services
Mining
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NUCLEAR: AREVA harvests the fruits of its long NUCLEAR: AREVA harvests the fruits of its long presence on the whole nuclear cyclepresence on the whole nuclear cycle
• N°1 in Nuclear
• N°3 in the T&D
• 61,000 people
• 100 countries
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NuclearNuclear isis backback
61Installed nuclear generating capacity set to increase Installed nuclear generating capacity set to increase worldwideworldwide
Rising demand and tight market in the front endNuclear plant construction set to accelerate after 2010
Replacement: ~100 reactors / Additional: ~35-300 reactors
Closed cycle to become the standard in the back end
IAEA 2006 – HauteIAEA 2006 – Basse
WNA 2005 – Hyp. hauteWNA 2005 – Hyp. moy.
IEA-2006 – AlternativeIEA-2006 – Réf.
DOE-EIA 2006 – Réf.
200
300
400
500
600
700
800
2005 2010 2015 2020 2025 2030
740
679
524
414368
+ 13%
+ 101%
416438519
400 reactors to be built
135 reactors to be built
Installed nuclear generating capacity – Forecasts (net GWe)
62T&D market to continue to grow at a sustained pace T&D market to continue to grow at a sustained pace over the next 2over the next 2--3 years3 years
Source: Internal AREVA analysis
Total market volume in € Bn56
35 36 35 3639
43
CAGR 01-04: + 2%
CAGR 04-06: + 9%
+ 11%
CAGR 06-10: + 6-7%
Actual
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Forecast
63Our customers are consolidatingOur customers are consolidating……The example of western Europe: 50% of the electric utilities werThe example of western Europe: 50% of the electric utilities were acquired during the 2000e acquired during the 2000--2006 period 2006 period
106
42
43
6*1
94
Number of electric utility companies
20002006
Note
* Excluding city-owned companies
41
64They are wealthy and announce a sharp rise in their They are wealthy and announce a sharp rise in their capital expenditurescapital expenditures
0
5
10
15
20
25
30
2004–2006 2007–2009
Upgrades to existing generating capacity
Development of new power generation capacity
Interconnections and upgrade of T&D grids
Annual operating Capex *
In billions of euros
Note* Source: AREVA estimates based on data published by our seven largest electric utility customers
+ 45% *
65AREVA is the only fully integrated player on the Nuclear AREVA is the only fully integrated player on the Nuclear value chainvalue chain
2006 market CAMECO URENCO USEC AREVA
Toshiba / Westinghouse
BNFL / BNG MHI AEP
GE / Hitachi Others
Mining / Natural Uranium 65,000 t 15-20% 5-8% 20-25% 20-25% 25-30%
Conversion / Chemistry 61,000 t 20-25% 5-8% 25-30% 20-25% 20-25%
Enrichment 43m SWUs * 20-25% 25-30% 20-25% 20-25% 5-10%
Natural Uranium fuel (UO2) 6,800 t 30-35% 20-25% 10-15% 15-20% 10-15%
Reactors & Services €11 Bn 20-25% 15-20% 5-10% 10-15% 35-40%
Treatment 30,000 t ** 70-75% 10-15% 10-15% JNFL in future
Recycling (MOX fuel) 2,211 t ** 65-70% 1-5% 30% (Belgonuclear) JNFL in 2014
Bac
k En
dFr
ont E
nd
Recent strategic movesAtomEnergoProm
to be launched early 2008
Note* Separative Work Units** Cumulated, worldwide – AREVA Estimate
66Drivers Drivers favoringfavoring the the AREVAAREVA’’ss integrated model integrated model are hugeare huge
Portfoliosynergies
FinancialMitigated risks
Lower volatility
HRAllocation
Expertise management
Attractiveness for talents
Commercialsynergies
Internationalrecognition
Long term commitment / customers security of supply
Customer access to recycling
Cross selling
Technologicalsynergies
Intelligent T&D networks
Gen III: fuel recycling connected to reactor’s design
Gen IV: fuel cycle interacting with reactor’s design
Nuclear revival & energy markets deregulation
External drivers favoring the AREVA’s integrated model
Tensions inFront End
Recyclingdevelopment
" Talents "battle
Energymanagement
systems
67AREVAAREVA’’ss integrated offering: a solution for each integrated offering: a solution for each client client –– ExamplesExamples
Extraction Fuel Services Back end solutions
Examples
Reactors
JV or existing contracts
FL 3
OL 3
T&D
Ongoing discussions or negotiations
EPRs
US-EPR
ConversionEnrichment
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AREVA business modelAREVA business modelA profitable growth storyA profitable growth story
69Main challenges for AREVA through 2011 Main challenges for AREVA through 2011 (Strategic plan horizon)(Strategic plan horizon)
2001 / 2005 Management of recurring operationsImprovement of margins in Europe
and growth in the US
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2020
2005 / 2009A period of significant Capex
ROI *
Period
Today
Maintain focus: improve profitability
of recurring operations
Profitable growth with operating
income target of > 10% of revenue
by 2011
Note* Return on investment
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AREVA generates strong cash from operating AREVA generates strong cash from operating activitiesactivities……
FY 2004 FY 2005 FY 2006
0 0 0
EBITDAWCR
Front end
R&S Back end
T&D Front end
Front end R&ST&D
Back end
R&ST&D
432
399
388
36
Back end
302
133
701
45
602
(14)
238
190
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…… that permits to finance an important CAPEX programthat permits to finance an important CAPEX program
395
2005
Capital expendituresIn millions of euros
336
2003
1,500 +2,000 *
2007
344
2004
Σ > 5,000
2008-20112006
1,249
Mining projects (UraMin, expansion of uranium exploration programs)Construction of GB II enrichment plantNew uranium conversion facilityAcquisition: Sfarsteel, Ritz High Voltage, Passoni & VillaDesign certification of the US EPRPreliminary studies for a Generation III treatment and recycling facilityDevelopment of digital control systems / information systems for power grids
* UraMin acquisition
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2007 and 2011 objectives2007 and 2011 objectives
2007
2011
Capture 1/3 of the world market in the nuclear business and €5 billion in T&D sales revenue
Achieve a double-digit operating margin
Reach a significant position in CO2-free generating systems
Strong sales revenue growth
Increase in operating income
Continued capital expenditures program
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Questions & AnswersQuestions & Answers