Alain-Pierre Raynaud Chief Financial Officer AREVA 56
AREVA at a glance 57
AREVA is Nr 1 in Nuclear and Nr 3 in T&D 58 2006 Sales by business Geographic sales 7.1 Bn N 1 worldwide in Nuclear Other 66% 2006 market size: 25 Bn Asia 7% France Market share: 28% 14% 33% No.1 in Europe and the US No.1 in Plants / Fuel No.1 in the Back End 17% 3.7 Bn N 3 worldwide in T&D Americas 29% 34% 2006 market size: 43 Bn Market share: 9~10% Europe (Excl. France) ( vs ABB: 24%, Siemens 18%) Breakdown of AREVA sales in 2006 ( 10,863 MM)
NUCLEAR: AREVA harvests the fruits of its long presence on the whole nuclear cycle 59 Mining Chemistry Enrichment Fuel fabrication N 1 in Nuclear N 3 in the T&D Reactors 61,000 people 100 countries Recycling Mox fuel fabrication Spent fuel management Services Other sources of electric power Distribution Transmission 59
Nuclear is back 60
Installed nuclear generating capacity set to increase worldwide Installed nuclear generating capacity Forecasts (net GWe) 800 700 600 500 400 300 200 368 WNA 2005 Hyp. haute WNA 2005 Hyp. moy. IAEA 2006 Haute IAEA 2006 Basse 400 reactors to be built 135 reactors to be built 2005 2010 2015 2020 2025 2030 IEA-2006 Alternative IEA-2006 Réf. + 101% 740 679 524 519 438 416 414 + 13% DOE-EIA 2006 Réf. 61 Rising demand and tight market in the front end Nuclear plant construction set to accelerate after 2010 Replacement: ~100 reactors / Additional: ~35-300 reactors Closed cycle to become the standard in the back end
T&D market to continue to grow at a sustained pace over the next 2-32 3 years 62 Total market volume in Bn 56 35 36 35 36 39 + 11% 43 CAGR 06-10: + 6-7% CAGR 04-06: + 9% CAGR 01-04: + 2% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Forecast Actual Source: Internal AREVA analysis
Our customers are consolidating The example of western Europe: 50% of the electric utilities were e acquired during the 2000-2006 2006 period 63 6 10 4 1 2 4 9 4 3 4 6* 1 Number of electric utility companies 2000 2006 Note * Excluding city-owned companies
They are wealthy and announce a sharp rise in their capital expenditures 64 Annual operating Capex * In billions of euros + 45% * 30 25 20 15 10 5 0 2004 2006 2007 2009 Upgrades to existing generating capacity Development of new power generation capacity Interconnections and upgrade of T&D grids Note * Source: AREVA estimates based on data published by our seven largest electric utility customers
AREVA is the only fully integrated player on the Nuclear value chain 65 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% Back End Front End Conversion / Chemistry 61,000 t 20-25% 5-8% 25-30% 20-25% 20-25% Enrichment Natural Uranium fuel (UO2) 43m SWUs * 20-25% 25-30% 20-25% 20-25% 5-10% 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 Recent strategic moves AtomEnergoProm to be launched early 2008 Note * Separative Work Units ** Cumulated, worldwide AREVA Estimate
Drivers favoring the AREVA s integrated model are huge 66 Commercial synergies International recognition Long term commitment / customers security of supply Customer access to recycling Cross selling Financial Portfolio synergies Mitigated risks Lower volatility HR Allocation Expertise management Attractiveness for talents Technological synergies Intelligent T&D networks Gen III: fuel recycling connected to reactor s design Gen IV: fuel cycle interacting with reactor s design External drivers favoring the AREVA s integrated model Tensions in Front End Recycling development Energy management systems " Talents " battle Nuclear revival & energy markets deregulation
AREVA s integrated offering: a solution for each client Examples 67 JV or existing contracts Ongoing discussions or negotiations Extraction Conversion Fuel Reactors Services Back end Enrichment solutions T&D Examples FL 3 US-EPR OL 3 EPRs
68 AREVA business model A profitable growth story
Main challenges for AREVA through 2011 (Strategic plan horizon) 69 Today ROI * Period 2005 / 2009 A period of significant Capex Profitable growth with operating income target of > 10% of revenue by 2011 2001 / 2005 Management of recurring operations Improvement of margins in Europe and growth in the US Maintain focus: improve profitability of recurring operations 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2020 Note * Return on investment
AREVA generates strong cash from operating activities 70 FY 2004 FY 2005 FY 2006 701 602 302 432 399 388 238 190 133 36 45 0 0 0 R&S R&S Back end T&D T&D Front end Back end Front end (14) R&S T&D Front end Back end WCR EBITDA
that permits to finance an important CAPEX program 71 Capital expenditures In millions of euros 1,500 +2,000 * Σ > 5,000 1,249 336 344 395 2003 2004 2005 2006 2007 2008-2011 * UraMin acquisition Mining projects (UraMin, expansion of uranium exploration programs) Construction of GB II enrichment plant New uranium conversion facility Acquisition: Sfarsteel, Ritz High Voltage, Passoni & Villa Design certification of the US EPR Preliminary studies for a Generation III treatment and recycling facility Development of digital control systems / information systems for power grids
2007 and 2011 objectives 72 2007 Strong sales revenue growth Increase in operating income Continued capital expenditures program 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 CO 2 -free generating systems
Questions & Answers 73