Italian aerospace and defence group Finmeccanica is looking for a partner for its US unit DRS Technologies as part of a new multi-year strategy to streamline operations.
The state-owned group was also cited telling a business presentation yesterday that…
Italian aerospace and defence group Finmeccanica is looking for a partner for its US unit DRS Technologies as part of a new multi-year strategy to streamline operations.
The state-owned group was also cited telling a business presentation yesterday that it would exit parts of DRS that have combined sales of €200m (US$225m).
It did not specify whether these would be sold or closed.
Finmeccanica bought the group back in 2008 for US$5.2bn, inclusive of roughly US$1.2bn in net debt. Since then the defence electronics group, whose products range from satellite communication terminals to avionic stationkeeping equipment, has come under pressure from declining US government spending and the global financial crisis.
Mauro Moretti, Finmeccanica CEO’s, told the presentation that DRS’ business volumes have halved since 2009 and have provided little synergies for the wider group.
Its new business plan also includes the sale of rail assets and the transfer to Boeing of part of its B787 aircraft contract so it can become leaner and pay off debt.
The group expects to post €1.04bn-1.06bn (US$1.18bn-1.20bn) in EBITA for 2014, up from its previous guidance of €980m-1.03bn (US$1.11bn-1.16bn). For 2015, it is now targeting €1.15bn-1.20bn (US$1.30bn-US$1.35bn).
“The industrial plan is the result of intense work carried out with determination in recent months by the management team of Finmeccanica and of the operating companies,” said Moretti.
“The further upward revision of commercial, economic and financial guidance for 2014, the improvements in profitability and cash generation expected in 2015, together with the medium-term objectives, that also involve a major reduction in debt – even without including the effects of any extraordinary transactions – make us even more determined in the execution of the Plan approved today and confident of achieving these objectives.”
Finmeccanica also owns a 14% stake in Italian defence and rocket equipment specialist Avio Space, which was running a sales process until recently. Private equity firm Cinven, which holds around 81%, scrapped the sale following the indecision of Italy’s government, and a raft of contract wins for Avio’s Vega launcher that is expected to increase its value.
* Update 2 February 2015 *
Moretti was cited telling Italian daily la Repubblica on 2 February that the group may decide to sell DRS Technologies once it has found a partner for it.
He reportedly said Finmeccanica planned to make a decision on the unit’s future in the coming months, adding that it would first sell some of the DRS Technologies’ assets.
