European missile house on track for $4.2 billion revenues as it bids to push into US market

MBDA should achieve net revenues of €3.5 billion ($4.2 billion) in 2004 and expects to finalise a merger with German missile house LFK within six months, says chief executive Marwan Lahoud.

A merger with Germany's other remaining missile house BGT is also under discussion, along with a renewed push to secure export sales into the US military.

MBDA already owns 20% of LFK with discussions on its integration on and off for the past two years. Lahoud says: "The ball is rolling [and has] gained enough speed to be fully confident in having something mid-next year…We have never been so close."

The merger model is based on the EADS company selling its majority stake in LFK to MBDA, which is itself a joint venture between EADS, BAE Systems and Finmeccanica.

Lahoud says: "Strategically, everyone agrees that it doesn't make sense to have EADS holding shares in two different missile interests."

He says, however, that while "it is very important to have LFK on board, it is not going to be the philosopher's stone of missile [sector] integration [in Europe]".

Lahoud says he expects BGT to remain a key player in the European missile market "for as long as the German government funds programmes".

While "the ball is rolling with BGT also", no merger deal is likely with that firm in the near future. Lahoud says he believes the merger sequence "should start with integrating LFK".

MBDA's revenues for 2003 are expected to come in at around €2.4 million, compared with €1.8 million in 2002. Lahoud says the development of new markets remains essential to the company sustaining this growth, with the US a key target.

The performance of MBDA's Storm Shadow long-range stand-off missile during Operation Iraqi Freedom is likely to provide a major boost to the company's reputation with the US military, he says. However, he also says that existing approaches to that market by European industry have tended to be unsuccessful because they have been mainly pursued at a government-to-government level.

Lahoud says any future missile deal with the USA "cannot be done top down. It is not a matter of politics…We need to treat the US market as an ordinary market. We need to convince the USA that the product is superior."

Source: Flight International