AEA Technology is in talks with a nuclear engineering group about a joint-venture company to handle nuclear decommissioning and waste management.
The move will mark a consolidation in a market that is increasingly mature and competitive.
AEA chief executive Peter Watson told The Engineer that the group was seeking a partner to boost waste management and decommissioning margins, and that a joint venture was seen as ‘the only option’.
Of the half dozen engineering companies in this market, BNFL’s decommissioning business could be a good fit with AEA, industry observers say. BNFL denied it was involved in any deal.
Announcing AEA’s annual results this week, Watson stressed that nuclear engineering faces a tough market, particularly in the UK. ‘Business with our former major client, UKAEA, will continue to decline,’ he said.
But overseas contracts will provide growth. The first Chernobyl clean-up contracts will be let next month, providing AEA with up to £20m of contracts up to 2003.
Diversification into high-tech areas helped raise AEA’s operating profits 28% to £30.7m; turnover rose 17% to £308.4m.
AEA’s technical services were driven by rail research at the BRR division, as well as millennium bug consultancy and gas and oil plant support services.
Lithium-ion batteries and engineering software were the biggest profit areas; sales rose a quarter to £67.6m, while profits surged 45% to £13.9m. Operating margins hit 20.6%.
AEA’s Li-ion battery patents run out in 2000, but the group has acquired DSB Special Batteries to trade licence income for production capacity.