Finmeccanica on Wednesday, 18 March unveiled a set of 2014 financial results it heralds as a “significant turnaround”, with profit (EBITA) in its core aerospace, defence and security businesses rising nearly a quarter to €833 million ($890 million) on sales up nearly 10% to €11.1 billion.
Group performance was similarly positive – profit up 23% to nearly €1.1 billion on sales up by 7% to €14.7 billion – but the first quarter of 2015 featured an agreement that will see Hitachi buy the Ansaldo Breda rail businesses, finally ending a four-year push by Finmeccanica to divest energy and transport units that have been major factors in ongoing debt and profitability woes.
The Hitachi deal will bring Finmeccanica some €810 million, reducing corporate debt by €600 million and – in the words of Mauro Moretti, the chief executive appointed last year by then new Italian prime minister Matteo Renzi – leaving the group free to “focus its resources on the core sectors”.
The company will remain in the domain of Italian state-owned firms, but after decades as a holding company managing a basket of legally separate national industrial assets, Finmeccanica under Moretti is now operating as a single company, with strong central control over investment, operating activities and industrial processes such as supply chain management and technology sharing.
This strategic plan for control and divestment was essentially spelled out by then chief Giuseppe Orsi following a disastrous 2011 for the company. That year, heavy losses at the company’s power and road and rail transport divisions combined with a €750 million write-down against defects in fuselage sections and horizontal stabilisers – which it supplies to theBoeing 787programme – to contribute to a net loss of more than €2.3 billion.
Subsequent woes included a scandal embroiling Finmeccanica’s AgustaWestland helicopters unit in allegations that the company paid to win a lucrative deal to supply VVIP helicopters to India. The scandal ultimately cost Orsi his job, although he was later found not responsible.
Finmeccanica has also suffered in the aftermath of its $5.2 billion acquisition of US defence security firm DRS just before the financial crisis struck in 2008. At the time the deal was heralded as a grand strategic stroke that would give Italy’s aerospace champion a firm footing in the then booming US defence market. However, the company has struggled to perform, although Moretti is now talking about a “return to its underlying profit margins”.
Debt also remains a problem for Finmeccanica. At 31 December, net debt was nearly €4 billion, essentially unchanged during the year. Cash from the sale of its share of the Avio aeroengines business to GE was offset by a revaluation of debt owing to the strengthening of the US dollar versus the euro.
Source: FlightGlobal.com
