Finmeccanica Continues To Face Uphill Struggle

By Anthony Osborne
Source: AWIN First
August 01, 2013
Credit: AgustaWestland

Italian aerospace and defense conglomerate Finmeccanica is continuing to negotiate the sale of non-core businesses in a bid to cut its burgeoning debt.

The company is increasing its focus on its aerospace and defense businesses, which have had a relatively comfortable first half of 2013, compared to its struggling transport and energy businesses that have, according to CEO Alessandro Pansa, frustrated investors and resulted in the downgrade of the company’s credit rating.

Pansa said it has been “frustrating” that the company had not achieved several divestitures in the past year, but he is confident that a “proper solution” can be found. He urged investors to “trust in Finmeccanica’s management.”

New orders in the second quarter of 2013 dropped by 24%, with an 11.5% drop over the first half of the year compared to 2012. The company’s aeronautics business saw an increase of nearly 10% in new orders, thanks mainly to increased orders for the ATR family of regional airliners.

Finmeccanica said its DRS Technologies division had recorded results “considerably higher” than outlined in the company’s initial budget, which had “positive effects” on the profitability of the company. Selex ES is currently in negotiation with trade unions on a restructuring process. The effects of this restructuring will be “fully felt” in the next financial years and will affect 2013 performance only to a limited extent, the company said.

Defense and aerospace work now represents 81% of Finmeccanica’s total orders, and 85% of total revenues.

AgustaWestland saw orders fall by nearly 20% compared to the same period in 2013, although revenues increased due to sales of the popular AW139 aircraft. EBITA improved as well, thanks to increased production rates and efficiency improvements, but also from the final closing payments of the canceled VH-71 presidential helicopter program.

The company recently announced it would not be re-entering the second VXX program in partnership with Northrop Grumman. Key orders, previously unannounced by the company, include three kits for the AW101 helicopter to be supplied to Kawasaki Heavy Industries to build the type for the Japanese armed forces.

Alenia Aermacchi, ATR and SuperJet International—which form the company’s aeronautics business division—saw an increase in order backlog of 2% because of major orders for the ATR regional turboprop aircraft, as well as Oman’s order for the Eurofighter Typhoon. Revenues also rose by 11% because of work needed to accommodate higher production rates on new-generation airliners, such as the Boeing 787 and Airbus A380 and A321.

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