MBDA sets sights on US weapons sector

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Having won more than 50% of its orders in 2009 with export customers and achieved the best profitability since its formation, MBDA has set its sights on its toughest challenge yet: securing meaningful business in the USA.

MBDA's home markets since 2001 are France, Germany, Italy and the UK. In March it added Arlington, Virginia-based MBDA Inc as a standalone company.

"This is a market which has not been easily accessible to us," says MBDA chief executive Antoine Bouvier. Although present for several years with fewer than 100 employees in West Lake, California, the US business was relaunched in mid-2009 under the leadership of former Northrop Grumman executive Jerry Agee.

BUSINESS EXPANSION

The move is already paying dividends, according to Bouvier. "In a matter of a few months we have a much better understanding of the USA, and our profile has been significantly reinforced." MBDA Inc is conducting assessment phase studies for the US Department of Defense and is working "to develop a close and trustful relationship with US companies".

The goal is to increase the annual value of US business from "tens of millions of dollars" to €300 million ($403 million) a year between 2015 and 2020 by pursuing organic growth, new partnerships and potentially even through small acquisitions.

"What we could deliver is more choice, more alternatives and access to mature technologies and efficient products," Bouvier says. These could include ramjet propulsion systems, fuzes and warheads, with the anti-radiation missile sector a possible area of co-operation.

"Our strategy to grow our presence in the USA has been blessed by our three shareholders," he says. BAE Systems and EADS each hold 37.5% stakes, and Finmeccanica 25%.

But for now most business is done in its European home nations and the Gulf Cooperation Council states, with the latter accounting for 60% of exports.

For the first time, MBDA last year secured more orders from export buyers than its domestic customers, with a split of €1.33 billion (up from €1 billion in 2008) to €1.27 billion. Likely to be matched this year, the €2.6 billion total was up €300 million on the previous year. The company retained a roughly four-year orders backlog worth €12 billion, and bettered a long-term objective to make a 10% return on sales.

"We are now at a good level of performance, and looking at how we grow the business," says chief finance officer Julian Whitehead.

Bouvier says 2009 "confirmed our strategy to grow as a global player. We cannot communicate on our most brilliant sales." He cites requests from customers, but confirms the largest international deal was linked to a combat aircraft bought by a GCC member.

The United Arab Emirates could be the source of a major order this year if it completes a purchase of Dassault Rafales, he says, along with Brazil. "I am confident one of these opportunities will materialise in 2010," he says.

India is considered a longer-term prospect, with MBDA offering weapons for the Rafale, Eurofighter Typhoon and Saab Gripen NG. Further growth could come in eastern Europe, for example through a new joint venture with Polish firm Bumar.

Company officials are also in "ongoing discussions" with South Africa's Denel Dynamics about a possible relationship. "I am not in a position to comment further, but it's an opportunity for MBDA to be more global," Bouvier says.

In Europe, he hails the level of partnership with the UK Ministry of Defence on the Team Complex Weapons initiative. The MoD has stepped back from an overarching alliance framework with industry, but will sign bilateral agreements with prime contractors for specific guided weapons programmes, starting with MBDA.

And progress is being made in France, which is teamed with the UK on assessment phase projects to enhance their Scalp EG/Storm Shadow cruise missiles and field a 100kg (220lb) anti-ship missile.

"The way the MoD is supporting us is something that is extremely efficient," says Bouvier. "We will learn a lot in all of our countries from what is done in the UK."