Finmeccanica trims profit forecast
by Guy Dinmore in Rome
Finmeccanica, Italy’s defence and industrial conglomerate, on Friday said it would lay off 1,500 workers, mostly in its aerospace business, as it trimmed its 2010 profit forecast.
The announcement came as Italy reported that unemployment in December had climbed to its highest levels in more than five years, to a seasonally adjusted 8.5 per cent.
Shares in Rome-based Finmeccanica fell about 3 per cent in early trading to their lowest level in six months, following its statement reducing guidance on Thursday night. Executives told a Friday conference call that 2009 had proved to be “much tougher” and that 2010 would be “more difficult” than expected.
Earnings for 2010 before interest, tax and amortization were forecast to reach €1.52bn to €1.6bn, down from a previous forecast of €1.65bn to €1.76bn.
Finmeccanica, which employs more than 73,000 people worldwide and is the UK’s second-largest defence contractor, said the temporary lay-offs would come mainly in Italy in the space, aeronautics and defence electronics sectors.
It said the duration of the lay-offs had not been decided and it was possible that some employees would work part-time.
Workers would receive partial compensation from a state fund that employers pay into and are not included in official unemployment statistics which mask the real jobless level in the country.
It did not give a complete breakdown for the cuts but spoke of a “temporary headcount reduction” of 1,000 in aeronautics, mainly in the Alenia division.
Finmeccanica said it would seek to expand in emerging markets, including Russia, Libya, Brazil and the Middle East. It noted a gradual shift of demand for investment in aerospace, defence, energy and transport from traditional markets to emerging markets “which are becoming increasingly competitive”.
Finmeccanica hopes to reach a decision in March-April on the sale of its Ansaldo Energia unit, which includes its nuclear energy division. Finmeccanica had put off the sale of a minority stake in the unit because of tough market conditions. It said it was examining a proposal to sell a “significant” stake to an industrial partner that could bring access to markets outside the west. It gave no details. The alternative would be an initial public offering in 2010.
A full 2009 earnings report will be released on March 4. It said revenue last year was estimated at €17.9bn to €18.3bn, slightly up on earlier forecasts. The dividend in 2010 will be maintained at the same level as 2009.
Alessandro Pansa, chief financial officer, said the lower profit forecast for 2010 did not imply a prolonged reduction in profitability. Increased margins were expected by 2011-2012, he said.
UBS, in a note to investors on Thursday evening, said it was the second consecutive year that Finmeccanica had reduced guidance. It noted weaker cash flow in 2010 but above guidance cash flow last year. “The long-term growth prospects for Finmeccanica brought by its positions on growth programmes, particularly in helicopters and aeronautics, remains unaffected by this latest development in our view,” UBS said.