Finmeccanica: Board of Directors approves the Interim Financial Report at 30 September 2015
The results at 30 September 2015 confirmed the Group considerable improvement in both the business and financial performance as compared with the corresponding period of 2014, in line with the results achieved in the previous quarters and with the targets set out in the 2015-2019 Industrial Plan. More specifically, Finmeccanica reported considerably improved profitability, with EBITA up almost 50% compared to the first nine months of 2014, an EBIT that nearly doubled and a net profit of €mil. 160, compared with a net loss of €mil. 24 a year earlier. The improvement in the net result was even more significant at the Net Result Before Extraordinary Transactions level (thus excluding profits from discontinued operations), which increased from negative €mil. 54 to positive €mil. 150.
To be more specific, the results for the first nine months of 2015 (which no longer include the contribution of the operations in the Transportation sector - transferred to Hitachi – as they are separately classified among discontinued operations, show:
- New orders: amounted to EUR 7,791 million, above the same period of 2014, due in particular to a positive foreign exchange effect, despite a decline in Helicopters (also for Oil&Gas) and Aeronautics, which both benefitted from major extraordinary orders last year.
- Order backlog: amounting to EUR 28,071 million, ensures about two and a half years of equivalent production for the Group.
- Revenues: amounted to EUR 9,001 million, +4.6% compared to the first nine months of 2014.
- EBITA: positive EUR 745 million, significantly improved (+45%) compared to positive 515 million of the first nine months of 2014. Even excluding the expense in 2014 of about $mil. 100, relating to a specific DRS programme, there is still a significant improvement as a result of the benefits connected with the efficiency-enhancement and cost reduction plans launched in previous years. ROS at 8.3%, 230 bps higher than the same period of last year.
- EBIT: positive EUR 599 million, +84% compared to positive 325 million of the first nine months of 2014.
- Net result before extraordinary transactions (without considering the activities of the Transportation sector under disposal): positive EUR 150 million, compared to negative 54 million of the first nine months of 2014.
- Net result: positive EUR 160 million, compared to negative 24 million of the first nine months of 2014.
- Group Net Debt including discontinued operations amounted to EUR 5,125 million. This represented an improvement of 224 million compared to 5,349 million at 30 September 2014, notwithstanding the negative foreign exchange differences on debts denominated in sterling and US dollar. The increase, in comparison with EUR 3,962 million at 31 December 2014, was essentially due to the negative effect of the cash flows of the period, reflecting the typical seasonality in the Group’s performance.
- Free Operating Cash Flow (FOCF): negative EUR 935 million, improved by 420 million compared to negative 1,355 million of the first nine months of 2014. The latter was negatively impacted by the enforcement of the guarantees for the Indian contract in the Helicopters sector (€mil. 256), partially offset by higher dividends received from the joint ventures.
Based upon the results reported by the Group at 30 September 2015 and the expectations for the last quarter of the year, we confirm the full-year outlook as presented in the 2014 Annual Report. With regards to the EBITA we expect it to be at or around 1,130 million euro, based on the original currency assumptions (€/$ exchange rate at 1.27 and €/? at 0.8).
Furthermore, the Board of Directors today approved, on the basis of the divisional model "One Company", the new organizational structure of Finmeccanica which, as previously announced, effective from 1 January 2016 will be organized in four Sectors and seven Divisions, with a new Governance aiming at centralizing the Group guidelines and control systems whilst decentralizing the business management to the Divisions. The Board further defined duties and responsibilities vested with Sectors, Divisions and the relevant leaders.
Finally the Board shared the process carried out by the CEO and General Manager in order to identify the best candidates for the role of leader of each Sector and Division and acknowledged the name of the persons consequently appointed in such positions by the CEO and General Manager.
- Helicopters Sector (Daniele Romiti), with the Division "Helicopters" (Daniele Romiti);
- Aeronautics Sector (Filippo Bagnato) with the Divisions "Military Aircraft" (Filippo Bagnato) and "Aerostructures" (Alessio Facondo);
- Electronics, Defence & Security Systems Sector (Fabrizio Giulianini) with the Divisions "Airborne & Space Systems" (Norman Bone), "Land & Naval Defence Electronics" (Lorenzo Mariani), "Defence Systems" (Roberto Cortesi), "Security & Information Systems" (Andrea Biraghi);
- Space Sector (Luigi Pasquali).
The third quarter and the first part of the fourth one also showed further significant progress in the achievement of the targets aimed at the Group’s development and greater focus on, and the strengthening of, its core business set out in the 2015-2019 Industrial Plan:
- on 2 November 2015 the closing of the disposal of the Transportation business to Hitachi was finalised. The transaction, which completed the disposal plan started by Finmeccanica, provided for the transfer to Hitachi of the investments held by Finmeccanica in Ansaldo STS (equal to approx. 40% of the share capital) and AnsaldoBreda, excluding some revamping activities and certain residual contracts, which will remain within Finmeccanica. As per the agreements signed on 24 February 2015 and further to the distribution of dividends of € 0.15 per share, announced on the 6th of March 2015, the purchase price of the Shares of Ansaldo STS amounts to € 9.50 per share, corresponding to a total consideration for the stake sold of €mil. 761. The total net consideration at the closing date to be paid to Finmeccanica under the purchase agreement of AnsaldoBreda S.p.A. going concern, including real estate assets, amounts to ca. €mil. 30. As a result of these transactions, Finmeccanica Group’s Net Debt will decrease by ca. €mil. 600, reduction already factored into the full year 2015 guidance, with a capital gain (subject to the valuation of indemnities and price adjustments) estimated in ca. €mil. 250.
- on 6 October 2015 Finmeccanica signed an agreement with Danieli Group for the transfer of 100% of Fata (which operates in the design of industrial plants), excluding some assets that will remain within the Group’s perimeter. The transaction is expected to be completed in the first quarter of 2016.