Sweden-based nuclear technology company Studsvik’s sales rose by 10.6 percent year over year in the first quarter of 2016, according to the company earnings report Monday.
Sales increased from 156.8 Swedish krona (SEK) ($19.4 million) in first-quarter 2015 to 171.6 million SEK ($21.2 million) in the same time span this year, the report shows. According to the report, the company’s profit per share after tax was recorded at .72 SEK, up from -.29 SEK in the first quarter 2015.
Operating profit improved from a 1.7 million SEK ($210,000) loss in first quarter 2015 to 10.7 million SEK ($1.3 million) in 2016. Free cash flow now stands at -2.2 million SEK (-$272,000), up from -4.8 million SEK (-$593,000) in first-quarter 2015.
A company of 800 employees across seven countries, Studsvik provides waste treatment, consultancy, and fuel and materials technology services in the nuclear industry.
The report touches on the April sale of Studsvik’s waste treatment units in Sweden and the U.K. to French state-owned power company EDF SA for 355 million SEK ($44 million). According to the Studsvik report, the transaction will generate a positive cash flow of about 225 million SEK ($28 million), and produce a net result of about 115 million SEK ($14.2 million), which is expected in the third quarter.
Studsvik expects to close the EDF transaction in the third quarter of this year, pending regulatory approvals. EDF operates 58 reactors in France and 15 in the U.K.
During the company’s first-quarter earnings call Monday, Studsvik President and CEO Michael Mononen described a waste treatment market that looks weak in the short term, with long-term potential as decommissioning programs progress in Europe and North America.
According to the report, waste treatment sales decreased from 44.7 million SEK ($5.5 million) in first-quarter 2015 to 37.4 million SEK ($4.6 million) in first quarter of 2016. Coincidentally, operating profit suffered a greater year-over-year loss, from a 3.2 million SEK ($400,000) loss in first-quarter 2015 to a 12.7 million SEK ($1.6 million) loss in 2016. Monenen called it a tough market, noting that about 8 million SEK ($990,000) was added to the first-quarter 2016 through divestment of waste treatment to EDF SA.
Mononen also noted Monday’s announcement of Studsvik’s joint-venture project with Japan’s Kobe Steel, in which the companies will deliver waste management design, engineering, and implementation services for Japanese sites. The announcement says the venture will combine Studsvik’s design and engineering experience, particularly its THOR treatment technology, with Kobe’s industrial and delivery capabilities in Japan. Most recently, Kobe built and implemented a new waste incinerator at the Fukushima Daiichi site. The two companies have worked together previously in Japan, and Mononen called it a “natural step.”
“We have had a long collaboration with Kobe Steel, and it was quite natural to take the step to form this joint venture, and as you may understand, we have had discussions with a number of potential customers in Japan to provide those solutions,” Mononen said.
With more private and public entities recognizing climate change as “a fact,” Mononen said the conclusion is that fossil fuel is something governments, politicians, and the general public would like to phase out. But it will be a long-term change that Mononen said provides Studsvik with opportunities to offer engineering and consultancy services. This is an area the company plans to pursue further once the waste treatment divestment is complete.
Markets in North America and Europe are stable, but there is no growth, and most utilities, if not all, are struggling to stay profitable, Mononen said, adding this has led to downsizing and careful spending. Mononen anticipates increased need in consultancy for nuclear decommissioning and dismantling in Europe, but particularly North America.
