Military, Products, Services

Finmeccanica 2011 Results: Helicopter Orders Take a Hit from ‘On Hold’ Government Contracts

By By Andrew Drwiega, Military Editor | April 2, 2012

Guiseppi Orsi, once CEO of helicopter manufacturer AgustaWestland, now chief executive of parent Italian defence company Finmeccanica, is overseeing the organization’s biggest overhaul in a decade.

Finmeccanica has just announced a EUR 2.3 billion ($3.06 billion) net loss for 2011, in contrast with a net profit of EUR 557 million the previous year. This was due to write-downs and one-off charges of EUR 3.2 billion, to which Orsi said: "There will be none of this kind of exceptionals in the future.”

Cuts in defense spending have led to reorganizing within Finmeccanica, but Orsi said that while the results were “ugly,” he did not anticipate delivering such a bad set of figures again. During the restructure, which is reportedly going to focus on the group’s energy and transport divisions, planned asset sales should generate EUR 1 billion by the end of the year.


Markets reacted positively to the news of asset sales. But Finmeccanica’s official 2011 budget release (on March 27) revealed that the recession had “started to touch the Aerospace and Defence sector and had a substantial impact in the Group’s key markets (Italy, the UK and the U.S.). Budgets for investment in military and security systems have been cut significantly since 2010, with forecasts of further drastic declines until 2015 and the likely cancellation of some very important programs.”

The following data was released regarding the AgustaWestland helicopter business (figures in EUR millions):
Revenues: totaled EUR 3.915 billion, an increase of 271 million (+7.4 percent) from the EUR 3.644 million recorded in 2010. The increase was due to the diverse mix of revenues where the helicopter is a component that stays in line with the values recorded in the previous fiscal year, while excellent performances were also recorded in product support with an increase of activity equal to 18.5 percent.
Adjusted EBITA: was 417 million, up from EUR 413 million in 2010 (+1 percent). The improvement was attributed to the aforementioned diverse mix of revenues. The ROS showed a slight decline (-0.7 percent) over the same period last year and stood at 10.7 percent compared with 11.3 percent on Dec. 31, 2010.
EBIT: was EUR 404 million on Dec. 31, 2011, up 6.6 percent versus EUR 379 million a year earlier, and includes non-recurring costs of EUR 4 million (EUR 27 million in 2010), relating to the Polish subsidiary PZL-Swidnik.
New orders: totaled EUR 3.963 billion, down by EUR 2.019 million from the EUR 5.982 million during the same period last year (-34 percent). 55.4 percent of the order volume came from helicopters (new and upgrades) and 44.6 percent came from product support (spare parts and services), engineering activities and industrial production. The decrease in the total volume was attributed to the postponement of some major government contracts from the beginning of 2011 until 2012. It should be noted that the figure during the previous fiscal year benefited from some major contracts worth a total of EUR 1.500 billion (12 AW101s for the Indian Air Force, and 15 AW101 CSARs for the Italian Air Force).
Order backlog: stood at EUR 12.121 billion, in line with the December 31, 2010 total (EUR 12.162 billion), which guarantees enough value to ensure the equivalent of about three years of production, 64 percent of which came from helicopters (new and upgrades), and 36 percent from product support (spare parts and services) and business development.
Related: Military Helicopter News

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