08 Nov 12. Finmeccanica sees hurdles as profits rise. Finmeccanica, Italy’s troubled defence and industrial group, says it is facing a challenging recession and “growing uncertainty” – particularly over US defence spending – but that it remains confident that its restructuring programme is on track to meet 2012 targets. Presenting “encouraging” third-quarter results on Thursday, Alessandro Pansa, chief operating officer, declined to provide more details on the main issue troubling investors, namely plans to raise €1bn through disposals of its energy and transport divisions. Citing “commercial sensitivities”, Mr Pansa would only say that he expected “an irrevocable offer” within the next weeks and that important progress had been made since Finmeccanica’s last statement in July. He did not name any company. “We hope we have contracts to sign,” Mr Pansa said, citing the possibility of a sum “in the territory of €1bn”. Sources close to Germany’s Siemens told the Financial Times last month that it was prepared to walk away from its €1.3bn offer to buy Ansaldo Energia, which is 55 per cent owned by Finmeccanica, after talks dragged on because of a political backlash in Italy that prompted the possibility of a rival offer by a state-backed strategic fund together with three Italian industrial investors. The disposals are seen as vital for state-controlled Finmeccanica, which reported a €2.3bn loss last year, to avoid the loss of its investment grade status and to reduce its debt, which reached €4.8bn by the end of the third quarter, up €197m from the end of June. Growth in its helicopter and aeronautics divisions helped Finmeccanica to record core profit, or earnings before interest, tax and amortisation, of €741m in the first three quarters of 2012, up 36 per cent on a like-for-like basis. Revenues were up 1 per cent on a similar basis to €12.2bn. New orders rose 4 per cent to €10.7bn in the nine months despite a 3 per cent fall in the third quarter. Progress in restructuring its lossmaking transportation segment was not satisfactory, Finmeccanica said. Giuseppe Orsi, chairman and chief executive, said the results confirmed the recovery of profitability seen in previous quarters. “Notwithstanding the national and international context characterised by a growing uncertainty, these results are an important indication that the restructuring and efficiency plan is progressing as planned,” he said in a statement, noting that 2012 represented a “delicate transition”.
Finmeccanica said it was confident it would meet 2012 targets set out last March, namely revenues of €16.9bn to €17.3bn, adjusted ebita of about €1.1bn and positive free operating cash flow. No mention was made in the results presentation of the various investigations by Italian prosecutors into suspected corruption at Finmeccanica involving aeronautics and defence deals with India, Brazil and Panama. Although the company has denied wrongdoing, investors remain concerned at the damage done to Finmeccanica’s image and the possible impact on future deals.
08 Nov 12. German industrial company Siemens AG SIE.XE said that it aims to cut €6bn ($7.66bn) in costs by 2014 and sell several assets in a new push to improve returns for shareholders, after posting a 27% decline in fiscal-year net profit. The Munich-based company also announced the €680m acquisition of LMS International, a Belgian supplier of simulation software for testing transport and energy equipment. Siemens—a bellwether for the European economy because of its broad range of industrial products, which include power equipment, high-speed trains, medical scanners and washing machines—said it aims to sell water-treatment assets with total annual revenue of €1bn, having failed so far to sell its Osram lighting business. It declined to comment on the scale of the job cuts involved in the restructuring plan. The plan marks a response to weakening global demand and falling prices for many of the company