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RISK FACTORS
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4.6 Risk related to major projects
4.5.6.
SUPPLIER CONCENTRATION IN THE PROCUREMENT CHAIN
A decrease in the supply of certain strategic components or an increase in the
cost of electricity could have a negative impact on the group’s production costs.
The group’s operations require large supplies of specific commodities and semi-
finished products, including base products, zircon ore and others. Some operations
also use large quantities of electricity.
The group’s large requirement for commodities and semi-finished products is such
that the group could experience procurement difficulties, given the limited number
of suppliers.
For all of these operations, a shortage of commodities or semi-finished products
could translate into a production slowdown or even, in certain circumstances, in
shutdown.
4.5.7.
RISKS RELATED TO ANOMALIES DETECTED IN THE FRAMEWORK OF QUALITY
AUDITS OF NUCLEAR COMPONENT MANUFACTURING
As explained in Section 9.1.
Overview
, AREVA initiated a quality audit in late 2015
of nuclear components manufactured at the Creusot plant. The first phase of the
Creusot audit revealed anomalies in some manufacturing files of equipment for
nuclear reactors.
AREVA expanded the audit to the Chalon-Saint Marcel and Jeumont equipment
manufacturing plants. As of this date, those audits have not led to a finding of any
deviation such as those found at the Creusot site, and were still in progress as of
the date of this document.
Unsatisfactory findings following the quality audits conducted in the Creusot, Chalon-
Saint Marcel and Jeumont plants could, as indicated in Section 9.1
Overview
,
compromise or delay the execution of the sale of AREVA NP’s operations to EDF
and have a significant unfavorable impact on the group’s financial position and
operations.
4.5.8.
RISKS RELATED TO IMPLEMENTATION OF THE PERFORMANCE PLAN
As explained in Section 9.1.
Overview
, AREVA announced on March 4, 2015 the
deployment of a performance plan to achieve 1 billion euros in operational gains
in 2018 compared with 2014. This plan rests on four pillars in particular: control
of payroll and compensation, productivity improvement, selectivity in purchasing,
and marketing and sales strategy.
While the group is working on the successful implementation of the performance
plan, no guarantees can be given as to the performance plan’s achievement of the
contemplated gains and cost reductions within the expected period of time. If the
group were not to achieve the objectives of the performance plan on time, or if it
were not to reach these objectives within the expected period of time indicated,
that could have a significant unfavorable impact on the group’s operations and
financial position.
4.6.
RISK RELATED TO MAJOR PROJECTS
Generally, revenue, cash flow and profitability recognized for a project may vary
significantly as a function of the percentage of completion of the project involved.
Furthermore, theymay depend on a certain number of items such as the occurrence
of unforeseen technical problems inherent in the complexity of the projects and/or
relative to the equipment supplied; loss of skills or questions about technologies;
and postponements or delays in contract execution. They may also be the financial
difficulties of the group’s customers; payments withheld by the group’s customers;
the default or financial difficulties of AREVA’s suppliers, subcontractors or partners
in a consortiumwith which AREVA is jointly responsible; and additional unforeseen
costs resulting from project modifications or changes in legislation. The profit
margins on some of AREVA’s contracts may prove to be very different from those
initially anticipated insofar as costs and productivity may vary significantly during
contract execution.
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REFERENCE DOCUMENT