Italy’s aerospace giant Finmeccanica is preparing a roadmap for global growth. Chief operating officer Giorgio Zappa talks to Luca Peruzzi about potential acquisitions, cooperation, partnerships and world market prospects.
Q Finmeccanica shareholders have approved a 10% equity increase to boost the group’s buying-power. What are the acquisition plans?
Firstly, we are making significant effort to continue growing organically, both in revenues and profitability. We are looking for revenue to increase in 2008 to €14.1-14.7 billion - compared to €12.4 for 2006 - while EBIT is foreseen to reach €1,050-1,170 millions, thus maintaining research & development investments which accounted for 14% of 2006 year revenues. In order to further strengthen our position on the international market, we could reach up to €4 billion (through capital increase, selling of financial participation in STMicroelectronics and debts) for acquisition purposes, especially in the defence electronics and US market, without ignoring other profitable opportunities.
Q There has been a lot of talk about Italian-French partnership, for example with Thales what is the position there?
Industrial ties usually follow cooperation between governments and armed forces. The partnership between Italian and French industries follows this approach, with the latest example being the Space alliance. We are involved in a series of joint industrial entities and government programmes with French companies including MBDA, Airbus, ATR, Neuron unmanned combat air vehicle, FREMM multipurpose frigates and NH-90 helicopter. However talks with French companies haven’t produced any agreements yet. Nevertheless we are talking with EADS on ATR and space launchers. Any discussion with Thales for other partnerships is subject to the new French government and its position on industrial cooperation.
Q What about EADS and the Airbus A350?
A few more months are expected before we can reach an agreement with Airbus on Alenia Aeronautica participation in the A350 programme. It is not a question of participation share but the quality of Finmeccanica involvement. The two-sides are still to find convergent interests.
Q The appointment of British representatives in Finmeccanica group such as Steve Mogford from BAE to run Selex S&AS, could be a sign of UK higher penetration and consolidation, and by reflection in US?
Following the complete acquisition of AgustaWestland and more recently of the remaining 25% stake in Selex S&AS from BAE Systems, UK became Finmeccanica’s second domestic market.
Therefore we need more Britons to establish a UK presence. Foreign managers in Finmeccanica could provide new market opportunities, including US. Our Group expansion strategy lies on the consolidation of the domestic markets, represented by Italy and UK - which are to account for more than 40% of orders in 2008 – and the expansion in the US and rest of the world.
Q So what are the plans for future penetration of the US market? Are you satisfied with JSF programme achievements?
We look at the US through the multiple strategic approaches according to different business opportunities.
The group presence in the US is much higher than a look at facilities and investments might suggest. For example we are involved with Boeing in the successful 787 breakthrough technology programme, with L-3 Communications and Boeing in the C-27J Spartan and with Lockheed Martin in VH-71 and F-35 JSF programmes.
As confidence building gained momentum, we were able to get through technological properties and transfer issues, as shown with the JSF.
Our participation to this successful programme includes aerospace and defence electronics group companies, in addition to the government-to-government agreement for a final assembly and checkout line (FACO) in Italy and our availability to contribute to local JSF maintenance and support activities.
Our view on the programme involvement is positive.
Q What about China, India and Russia?
To access these large markets we will pursue cooperation agreements with local partners. In addition to energy, transportation and civil aerospace, in China we hope to be able to cooperate in the medium-long term in high technologies sectors such as safety systems and electronics.
With an 8% annual growth rate, India needs to improve and build new infrastructures in order to maintain this path. We expect to have a greater presence there through high technology cooperation and are already present in the regional aircraft, avionics, air-traffic management systems, radars, communications, rotary wing, naval and weapon systems businesses.
Russia is the other large market where Finmeccanica has recently sold its Tetra digital mobile radio communication system and has established the strategic partnership for the Superjet 100 programme.
Q And the rest of the world?
In consolidating markets such as Greece, East Europe, Malaysia and Turkey, we will leverage on commercial achievements to further strengthen our presence.
In Turkey, for example - which we see as an industrial partner rather than a market - we are expecting to close a deal for the T129 attack helicopter; we also want to enlarge our business opportunities in the aerospace, air traffic control, helicopters, and communications domains.
Source: Flight Daily News
