Defense and aerospace giant Finmeccanica says it needs to become more streamlined and efficient to prepare for a weak 2013.
Releasing its 2012 figures on April 23, the company forecasts a slowdown in defense spending in its “domestic” markets — Italy, the U.K. and the U.S. — that will “cause a drop in the Group’s revenue volumes in 2013.” Accordingly, group companies will have to adopt new structural measures “aimed at improving industrial structures.”
The group suffered losses of €786 million ($1.022 billion), a considerable improvement on the company’s 2011 results, which saw it lose €2.306 billion. Revenues were down slightly to €17.2 billion. The losses were mainly due to goodwill write-downs on its U.S.-based DRS and Europe-based Selex ES defense electronics businesses.
While the results are an improvement on previous years, the company is continuing to battle with huge debts and reduced credit ratings. CEO Alessandro Pansa says he plans to further increase the restructuring measures introduced by predecessor Giuseppe Orsi, accelerate the review of the company’s portfolio and consider the disposal of further assets to improve its cash position and concentrating capital into key products that are successful in the marketplace. The company recently sold the aeronautical engine division of Avio S.p.A. to General Electric, but Avio’s space sector business remains in the hands of Finmeccanica and other shareholders.
Order intake was down €731 million to €16.7 billion, with many of the losses felt in Finmeccanica’s defense systems and space companies, as well as those in transportation and energy. According to the report, defense systems suffered because of the postponement of several key contracts domestically and overseas to 2013, while space revenue dipped because of the delay in the acquisition of the Cosmo 2G observation satellites.
The losses were offset, however, by stronger performances in the AgustaWestland helicopter manufacturing and Alenia Aermacchi divisions. The company says AgustaWestland’s new AW169 and AW189 products recorded 98 orders in 2012 while orders for the Eurofighter, M346 jet trainer, the C-27 Spartan airlifter and the ATR family of regional airliners were also boosted in 2012.
This year has already been a challenging one for Finmeccanica following the scandal over alleged corruption in a deal to sell VIP helicopters to the Indian air force. Italian prosecutors arrested both chairman and CEO Giuseppe Orsi and AgustaWestland CEO Bruno Spagnolini in early February, virtually decapitating the management of Italy’s second-largest private sector employer.
Orsi has since stepped down and was replaced by Alessandro Pansa, while Spagnolini was replaced by Daniele Romiti. Investigations by Italian and Indian authorities are continuing and Finmeccanica denies any wrongdoing in the Indian contract. The arrests have prompted wholesale changes to the management teams in a number of Finmeccanica-owned businesses. The company has also created an ethics committee in light of the scandal.
AW189 photo: AgustaWestland