Interiors and aircraft systems specialist Zodiac Aerospace believes the worst of an industrial crisis is behind it and that it is on the way to recovery, demonstrated by strong sales momentum in the second half of its financial year.
However, its seating division has yet to fully recover and saw revenue drop nearly 10% year-on-year, with a 13% fall in the fourth quarter alone.
A general "good performance" in the second half of the year ended 31 August is a sign that "the industrial recovery and transformation of Zodiac Aerospace Group are under way", says chief executive Yann Delabriere.
On an organic basis, second-half sales were down 1.4% at €2.68 billion ($3.11 billion), a recovery after a 2.6% decline in the first six months. Operating income came in at €218 million, against €269 million a year earlier.
But chief financial officer Didier Fontaine acknowledges that continued "weak industrial performance" in Zodiac's seating operation – blamed by Airbus for quality issues on the A350 – is "impacting current market share".
Although Zodiac saw an overall improvement in its interiors business – clawing back a first-half operating loss of €130 million to a €14.5 million loss in the final six months – Fontaine says this was largely driven by "industrial improvement and better on-time delivery" outside of the seat operation.
Seating revenue fell 9.6%, on an organic basis, to €1.24 billion against the previous financial year, while the rest of the cabin business recorded a drop in sales of just 2.1% to €1.64 billion.
The division's overall operating loss grew 45% year-on-year, to €145 million.
Delabriere says the manufacturer's priority "remains to fully restore the relationship with our customers".
It has achieved a "first set of improvements" to quality and on-time delivery issues but will now "go through additional steps that will lead the company to meet really its customer expectations" and "reach rapidly operational excellence".
This, Delabriere expects, will be partly aided by an industrial transformation, as Zodiac reduces its North American manufacturing footprint and consolidates engineering functions into new centres of excellence.
In addition, further manufacturing work will be shifted to a Mexican subsidiary in order to take advantage of its "low cost base".
Delabriere argues that Zodiac had previously "somewhat underinvested in the modernisation of the company", which may have hampered its ability to manage growth and meet customer demands.
"You know that in the past some of our issues were related to insufficient capacity in the ramp-up of our programmes, and it has also impacted our operational efficiency," he says.
Zodiac will invest during the current financial year in order to "modernise the manufacturing base of the company".
The manufacturer is currently in the process of being acquired by fellow French aerospace company Safran.
Source: Cirium Dashboard
