Joint venture with Diehl Group is next on multinational missile manufacturer's agenda

MBDA must increase its exports and raise "co-operation and interdependence between countries" in the face of "more and more challenging domestic market conditions", says chief executive Marwan Lahoud.

The company is on the point of closing its long-awaited deal to acquire German missile manufacturer LFK from EADS. "We've never been so close to closing the transaction," says Lahoud, adding "all the commercial terms of the deal are agreed". The process of final legal documentation and reviews is now under way. Lahoud says "it's 98% done...if everything goes to plan we should be able to have completed the deal before Le Bourget", with integration of the two businesses to follow.

Following the integration of LFK, MBDA hopes to set up a joint venture with German technology company Diehl Group, which owns 80% of LFK's rival BGT. Lahoud clarifies that MBDA has no plans to buy out Diehl: "The most likely route would be a joint venture, putting together assets and sharing strategic control of a German missile company," says Lahoud.

MBDA must co-operate more closely with foreign defence ministries and accept "more interdependence" between them. "We have to increase our efforts and be more creative with technology transfer, maximise contributions on aircraft campaigns, maintain niche positions and establish long-term agreements with regional platforms," Lahoud says.

However, the export market poses challenges to the company too, Lahoud says. He cites more aggressive traditional competitors as well as new entrants to the market, the weakness of the dollar in relation to the euro and its impact on long-running programmes as well the political restrictions around exports.

MBDA has an orderbook worth €13.5 billion ($17.1 billion), €1.3 billion lower than the previous year, as it delivers programmes faster than it takes new orders. Sustaining the orderbook is a "big challenge", but the backlog is still "healthy", says chief operating office Guy Griffiths.

The company achieved sales of €3.1 billion, and 72% sales growth in 2004, all of which was organic, says Griffiths. He predicts "any further growth will be external – from acquisitions in particular", with sales expected to stabilise around their 2004 level. MBDA has a target of an 8% return on sales for 2005, compared with the figure of 6.4% achieved in 2004.



Source: Flight International