Urenco hit by slowdown in uranium enrichment market

Urenco, the uranium enrichment company being privatised by its government and utility owners, expects revenues for the past 12 months to be down "around 5 per cent" on record levels of €1.6bn in 2012.

It blamed a continued slowdown of the enrichment market but stressed that despite the expected drop for the year to end December 2013, there had been "a substantial rebalancing of revenue" in the second half of the year.

Last September Urenco announced that revenues for the first six months of 2013 had declined 45 per cent to €384m and earnings before interest, tax, depreciation and amortisation (ebitda) had dropped 31 per cent to €319m due to the phasing of customer deliveries.

"The enrichment market is facing short-term pricing challenges," the company said in a trading update on Wednesday, but it added it expected "stabilisation in the longer term".

News of the tough trading environment comes amid questions over the timing of Urenco's privatisation. The company is owned by the British and Dutch governments and two German utilities, RWE and Eon. Previous attempts to privatise the company were frustrated by its complex ownership structure and the sensitive nature of its business. A sale could value Urenco between €8bn and €14bn.

The final obstacle to full privatisation was finally removed last May when the Dutch government said it had decided to sell its stake in the company. The UK government had confirmed it planned to sell its share a month earlier, while both RWE and Eon had signalled their intention to exit following the German government's announcement to phase out nuclear power. The three shareholders have been exploring a potential co-ordinated sale of their holdings and also the option of selling through a flotation of its shares.

Although no formal timetable for a sale has been set, there have been reports of fresh concerns among Dutch politicians.

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Any sale would be sensitive because enriched uranium can be used for military purposes as well as in civilian nuclear reactors. Michael Fallon, the business minister overseeing the sale of the UK's stake, said last April it would have to "deliver value for money and protect the UK's security and non-proliferation interests".

Potential bidders for Urenco include Cameco, the Canadian uranium miner, Toshiba, the Japanese conglomerate, as well as private equity groups. Urenco will report its full-year results in March.

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