Finmeccanica back in profit

Rome - Italian defense group Finmeccanica kicked off its landmark business reorganization process, one that seeks to transform the Group of Piazza Monte Grappa (in the interest of cost-cutting and creating synergies). The Board of Directors gave the green light to officially start the process to encompass the five core-business companies into Finmeccanica and turn them into divisions. Meanwhile, the board approved the results for the first two quarters of 2015, which heralded a return to profitability, compared to one year earlier.

The Group’s companies that will be subjected to this landmark streamlining process (the Finmeccanica of today is the result of corporate reorganization started in the 90’s), are its core aerospace, and defense and security subsidiaries: OTO Melara, Whitehead Sistemi Subacquei, Alenia Aermacchi, AgustaWestland and Selex ES. The new structure will formally come into effect in 2016, when the activities will be carried out by Finmeccanica through its divisions, coordinated by specific sectors. The goal of streamlining into divisions – pointed out the Group – is, “to operate more efficiently and effectively, and to reduce the costs of running the business by achieving economies of scale and to maximize synergies.”

The actual transformation will not be the same across the board: OTO Melara and Whitehead Sistemi Subacquei are to be merged into the Group, while in the case of Alenia Aermacchi, AgustaWestland and Selex ES, the companies will be broken up and only part of their assets will be merged (the remaining will form a sort of “bad company”). The merger and break-up plans were approved today by both Finmeccanica’s board and that of the individual companies; there just remains the go-ahead from the companies’ extraordinary general meetings and the forming of a new board for the holding company.

Finmeccanica is also benefitting from positive results in the first half of this year: €91 million in ordinary net earnings, from €61 million in losses for the same period in 2014, and €111 million net earnings (-€39 million last year); revenues are up 4.6% to €5.973 billion; positive EBITA of €450 million (+45%), positive EBIT of €350 million (+93%). Orders amounted to €5.539 billion, marking a 6.6% reduction (due to fewer helicopter and aerospace orders compared to 2014, when many, “extraordinary orders were received”), but still above expectations.

Noteworthy, the turnaround shown by DRS Technologies (increased orders and revenues; EBITA back in positive territory), thus validating CEO Mauro Moretti’s choice of keeping the firm within the Group. Based on these figures and on estimates for the next two quarters, Finmeccanica maintains its forecast for 2015.