Over the past few months DCNS, in which Thales (Euronext Paris: HO) holds a 35% shareholding, has conducted a comprehensive review of the financial and contractual status of several activities and complex programmes, which have had difficulties. The main conclusions of these reviews have been communicated to DCNS governing bodies.
On the basis of these latest elements, DCNS now expects that it should post a net loss of around €300m for the full year 2014, taking into account the booking of further charges and provisions. The difficulties are mainly found in the energy diversification activities, essentially in civil nuclear activities, as well as on some naval programmes.
- for civil nuclear energy activities: the extent of execution difficulties encountered by DCNS since 2013 should lead to a significant increase in the costs to completion of on-going projects, particularly the Jules Horowitz research reactor for the French Atomic Energy and Alternative Energies Commission (CEA);
- for naval programmes: the reviews have highlighted substantial increases in costs to completion, particularly on France’s Barracuda nuclear attack submarine programme. These developments lead DCNS to adopt a generally more cautious approach to this type of programmes.
For Thales, which consolidates its participation in DCNS under the equity method, DCNS’s contribution to the Group’s EBIT would be negative by around €100m in 2014, against a contribution expected to be close to zero (and a positive contribution of €40m in 2013).
Excluding this exceptional impact, Thales confirms that its performance in 2014 should be in line with its stated objectives of both stable order intake and sales and a 5-7% growth in EBIT. The release of the 2014 consolidated accounts, as closed by the board of directors, is scheduled on 26 February 2015.
Editor note – At 31 December 2013, the shareholdings in DCNS were
- 63.58% by the French State
- 35.00% by Thales
- 1.02% by DCNS current/former employees (through the DCNS Employees’ mutual fund)
- 0.40% by others
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