17 Oct 19. Thales adjusts down its 2019 organic sales growth target and confirms its other short and medium-term financial targets.
- Q3 2019 sales in line with consensus expectations: €4.2 bn, up 23.4% (+0.9% on an organic basis)
- 2019 sales growth target adjusted: growth now expected around +1%
- Confirmation of all other 2019 financial objectives (order intake and EBIT), as well as medium-term financial objectives presented at the 3 October Capital Markets Day
Thales (Euronext Paris: HO) will disclose its order intake and sales for the period ending 30 September 2019 at 7am CET on Tuesday 22 October.
In accordance with EU regulation No. 596/2014, which provides that issuers shall inform the public as soon as possible of inside information directly relevant to them, the Group is today announcing the adjustment of its 2019 organic sales growth target.
Thales now expects its organic sales growth to be around 1% over Full Year 2019. This adjustment is due to 2 operating segments: Aerospace and Defence & Security.
In the Aerospace segment, operators of commercial telecommunication satellites continued to adopt a wait-and-see attitude in the 3rd quarter, resulting in a lower than expected order intake, which will therefore contribute only slightly to Q4 sales. For the Full Year 2019, the Group now anticipates a decline of around 13% in space sales.
Nevertheless, the Group is currently participating in the final stage of 4 significant commercial satellite tenders, whose conclusion is expected in the coming weeks. This level of commercial activity confirms the gradual recovery of this market.
The long-term outlook for space markets remains robust, driven notably by the increase in space agency budgets, the growing importance of space systems for military applications, and the strong development of commercial connectivity needs.
In the Defence & Security segment, Full Year 2019 organic sales growth will remain high, around 6 to 7%, but should be lower than previously anticipated. The Group is facing a few delays on a limited number of projects, including a slower than expected production ramp-up on the Hawkei Australian military vehicles, and delays in contract awards by a few customers.
The 2019-23 growth outlook in this segment is unchanged.
At €4,220m, Q3 sales are in line with the consensus forecast of analysts who follow Thales results on a regular basis.
The acceleration of competitiveness initiatives enables the Group to maintain unchanged its Full Year 2019 EBIT target: Thales should deliver an EBIT of between €1,980m and €2,000m, based on September 2019 scope and currency.
The Group also confirms its Full Year 2019 order intake target, expected to be slightly above €18bn.
17 Oct 19. France’s Thales issues 2019 sales warning on space, defence woes. Thales (TCFP.PA) cut its 2019 revenue growth forecast on Thursday due mainly to slow sales of commercial satellites and production delays with an Australian military vehicle project.
Bringing forward part of a quarterly results announcement scheduled for Oct 22, the French company reported flat nine-month revenues of 10.87bn euros (9.4bn pounds).
Europe’s largest defence electronics company now expects full-year revenues to grow around 1% on an organic or like-for-like basis, rather than a previous goal of around 3%.
All other financial targets remain unchanged and Thales will communicate its quarterly order intake figures next Tuesday as previously planned, Finance Director Pascal Bouchiat said.
Thales builds satellites through Thales Alenia Space, two-thirds-owned by Thales and the rest by Italy’s Leonardo (LDOF.MI). French newspaper La Tribune reported earlier this year that it faced job cuts after losing market share to rivals.
Thales said the market was poised to recover, but not quickly enough to start bringing in the amount of revenue originally anticipated in the final quarter.
“Our space business is faced with a reduction in orders by the satellite operators. We think this market is gradually recovering but orders are a little slow to materialise,” Bouchiat told reporters on a conference call.
Thales is involved in the final stage of four significant commercial satellite tenders, whose conclusion is expected in the coming weeks, the company said.
In the defence business, Bouchiat cited delays in increasing production for the Hawkei Australian military vehicle programme, as well as delays in some unspecified contract signings.
Delays in building the light protected vehicles will result in some revenue landing in 2020 instead of 2019, Bouchiat said.
Asked about civil aerospace, where Thales supplies in-flight entertainment systems and avionics, Bouchiat said activity was “completely satisfactory” and in line with expectations. (Source: Reuters)
17 Oct 19. Honeywell cuts full-year revenue forecast after miss. Diversified manufacturer Honeywell International Inc (HON.N) fell short of Wall Street estimates for quarterly revenue on Thursday and cut its full-year sales forecast, as its customers remain cautious about capital spending amid a slowing global economy.
Honeywell’s diverse set of businesses, which range from warehouse automation equipment to catalysts used in gasoline production, are closely linked with the health of the global economy.
The prolonged trade war between the United States and China and the possibility of Britain exiting the European Union without a new agreement in place have weighed heavily on business confidence and resulted in sluggish capital spending. (reut.rs/35FrbHv)
Honeywell cut the top end of its full-year sales forecast to $36.9bn, while retaining the lower end at $36.7bn.
The company forecast fourth-quarter earnings per share between $2 and $2.05, below analysts’ average estimate of $2.06, according to IBES data from Refinitiv.
“Overall, we believe the quarter was generally in-line with expectations (better margin performance and weaker core growth),” Gordon Haskett analyst John Inch said.
“While the slightly lower fourth-quarter guide versus consensus is likely to be viewed as mildly disappointing – but likely also relatively resilient against the backdrop of the tough economy,” Inch added.
Honeywell, however, raised the lower end of its 2019 earnings per share forecast by 15 cents to $8.10, while reaffirming the higher end at $8.15, helped by higher sales of aerospace parts to airlines and the defense sector.
The grounding of Boeing’s (BA.N) 737 MAX aircraft earlier this year has forced airlines to substitute their fleet with older aircraft that require higher maintenance, boosting sales of spares for aero parts makers including Honeywell.
Sales in the aerospace unit, Honeywell’s biggest business that provides repair and overhaul services to airlines and makes auxiliary power units, wheels and brakes for Boeing Co (BA.N) and Airbus SE (AIR.PA) aircraft, surged 10% excluding the impact of foreign currency translation and other items.
Margin in the business jumped to 25.6% in the third-quarter ended Sept. 30, from 22.1%, a year earlier.
Overall margin rose to 21.2% in the quarter from 19.4%, a year earlier. On an adjusted basis, Honeywell earned $2.08 per share in the third quarter, beating analysts’ average estimate of $2.01.
Revenue fell 15.6% to $9.09bn and missed estimates of $9.11bn.(Source: Reuters)
17 Oct 19. Textron Announces Results.
- EPS of $0.95, up 56% from adjusted EPS a year ago
- Operating margin of 9.1%, up from 7.7% a year ago
- $109 m returned to shareholders through share repurchases
- Full-year EPS guidance narrowed to a range of $3.70 to $3.80
- Full-year cash flow guidance revised to a range of $600 to $700m
Textron Inc. (NYSE: TXT) today reported third quarter 2019 net income of $0.95 per share, compared to $0.61 per share last year of adjusted net income, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, or net income of $2.26 per share in the third quarter of 2018, which included the gain on the sale of the Tools & Test product line of $1.65 per share.
“Revenues were higher in the quarter primarily driven by Textron Aviation and Industrial, and we continued to have good execution with solid margin performance across our businesses,” said Textron Chairman and CEO Scott C. Donnelly.
Net cash provided by operating activities of the manufacturing group for the third quarter totaled $238m, compared to $319m in last year’s third quarter. Manufacturing cash flow before pension contributions, a non-GAAP measure that is defined and reconciled to GAAP in an attachment to this release, totaled $181m compared to $259m last year.
In the quarter, Textron returned $109m to shareholders through share repurchases.
Textron now expects 2019 earnings per share to be in a range of $3.70 to $3.80.
The company revised its expectation for manufacturing cash flow before pension contributions to $600 to $700m, from $700 to $800m. Expected pension contributions remain at about $50m.
Third Quarter Segment Results
Revenues at Textron Aviation of $1.2bn were up $68m from last year’s third quarter, primarily due to higher jet and aftermarket volume, partially offset by lower defense volume.
Textron Aviation delivered 45 jets, up from 41 last year, and 39 commercial turboprops, down from 43 last year.
Segment profit was $104m in the third quarter, up $5m from a year ago due to the higher volume and mix and favorable performance, partially offset by higher net inflation.
Textron Aviation backlog at the end of the third quarter was $1.9bn.
Bell revenues were $783m, up $13m from last year on higher commercial revenues, partially offset by lower military volume.
Bell delivered 42 commercial helicopters in the quarter, down from 43 last year.
Segment profit of $110m was down $3m from a year ago, primarily due to an unfavorable impact from performance which included lower net favorable program adjustments, partially offset by higher volume and mix.
Bell backlog at the end of the third quarter was $5.6bn.
Revenues at Textron Systems were $311m, down $41m from last year, primarily reflecting lower armored vehicle volume at Textron Marine & Land Systems.
Segment profit of $31m was up $2 m from last year’s third quarter.
Textron Systems’ backlog at the end of the third quarter was $1.4bn.
Industrial revenues of $950m increased $20m from a year ago, primarily related to a favorable impact from pricing within the Textron Specialized Vehicles product line.
Segment profit was up $46m from the third quarter of 2018, largely due to favorable performance and a favorable impact from net pricing, primarily related to the Specialized Vehicles product line.
Finance segment revenues were down $1m, and profit was up $2m from last year’s third quarter.
17 Oct 19. IBM shares plunge as it reports fifth consecutive quarter of declining revenue. In the third quarter to September 30, group revenue came in at US$18.03bn compared to analysts’ expectations of US$18.22bn IBM said it is expecting adjusted earnings of at least US$12.80 for the whole year. IBM Corp (NYSE:IBM) shares plunged in New York after the computer titan posted its fifth consecutive quarter of declining revenue as an uptick in revenue in cloud-based activity has not been able to counter falls in sales in the hardware and services businesses.
In the third quarter to September 30, group revenue came in at US$18.03bn compared to analysts’ expectations of US$18.22bn. Meanwhile, net income in the three months, excluding items, was slightly ahead of expectations at US$2.68 per share, compared to Wall Street forecasts of US$2.67.
Revenue from the cloud-based business for the quarter, which includes software multinational Red Hat, which IBM acquired earlier this year, was US$5.28bn, up 11%, but analysts had pencilled in US$5.43bn.
The group’s Global Technology Services arm, or ‘GTS’, posted US$6.7bn in revenue compared with US$6.77bn Wall Street consensus.
IBM expects adjusted earnings of at least US$12.80 for the year as a whole, while analysts are expecting US$12.80. (Source: proactiveinvestors.co.uk)
17 Oct 19. Quantum photonics hardware developer Nu Quantum raises pre-seed investment. Nu Quantum, the quantum photonics company, today announces the completion of a £650,000 pre-seed investment round. The over-subscribed round was led by Amadeus Capital Partners, with participation from IQ Capital, Ahren Capital, Cambridge Enterprise and Martlet Capital, the investment arm of Marshall of Cambridge Group.
The raise follows eight years of research at the Cavendish Laboratory at the University of Cambridge. Nu Quantum is building high-performance single-photon sources and detectors that work at room temperature. These devices are the building blocks that will enable a range of quantum technologies, the most near-term being Quantum Key Distribution (QKD): communication links which are completely secure as end users are able to detect any imprint on the exchanged photons left by a potential eavesdropper.
Nu Quantum will soon start working with a major UK telecoms company, testing its quantum technology. While several quantum companies are looking at the fibre-based application of quantum communication technology, Nu Quantum is one of the few looking at its application in ‘free space’ communications. This means communication without fibre optics – their vision for their proprietary components to form an end-to-end free-space quantum cybersecurity system which will enable the secure exchange of cryptographic keys globally via satellite and metropolitan links.
Carmen Palacios-Berraquero, CEO, Nu Quantum, explains: “To make quantum communication a reality there are, among others, two major challenges: to generate and detect single photons with high purity and efficiency. Nu Quantum is developing high performance quantum photonics hardware that works at the single photon-level, at room temperature. These quantum components are the necessary building blocks for any quantum architecture.”
Alex van Someren, Managing Partner Early Stage Funds, Amadeus Capital Partners, who will join Nu Quantum’s board, adds: “Nu Quantum is poised to unlock the potential of quantum communication. Using this investment by Amadeus, Nu Quantum will address the challenge of cryptography first. Based on its single photon sources and detectors, Nu Quantum aims to deliver high-rate, quantum-secure key generation and exchange, taking us one step closer towards absolute cyber security.”
Nu Quantum’s award-winning technology is unique and has been patented with the support of Cambridge Enterprise. Since inception in late 2018, Nu Quantum has been successful in receiving several Innovate UK grants and European research grants, taking its available capital to near £1m. The investment will enable Nu Quantum to develop its technology into full prototypes over the next 18 months.
About Nu Quantum
Nu Quantum is developing quantum photonics hardware to power the quantum revolution in communications, sensing and computing.
A spin-out of the Cavendish Laboratory at the University of Cambridge, Nu Quantum combines novel materials with traditional semiconductor photonics to achieve high performance at the single-photon level. The first application of these proprietary components will be an end-to-end free-space quantum cyber security system which will enable the secure exchange of cryptographic keys globally via satellite and metropolitan links.
16 Oct 19. Kleos Space establishes US foothold. ASX-listed Kleos Space has incorporated a wholly-owned US subsidiary to integrate and sell its maritime ISR (intelligence, surveillance, reconnaissance) data into US defence and security government departments, agencies and industry.
The US subsidiary, Kleos Space Inc (Kleos US), will provide Kleos access to government funding and projects that are otherwise restricted to US entities, for example the Small Business Innovation Research (SBIR) funding, the US Air Force Accelerator program or other grants from other US federal defence projects that contribute to scientific or technological advances.
The SBIR program accelerates development and production of promising technologies that can be utilised by the US Department of Defense, which enables small businesses and start-ups to explore their technological potential and provides the incentive to profit from its commercialisation.
The US subsidiary will continue Kleos’ existing work with the USAF Catalyst Accelerator and SBIR, leveraging the achievements of its SBIR Phase 1 contract with the aim of securing a Phase 2 contract, which includes SBIR funding of up to US$3m through US technology accelerator Ithaca Solutions.
The Kleos Scouting Mission 1 is on track to launch from Chennai, India, in the fourth quarter of 2019 and Kleos US enhances Kleos’ marketing strategy to target the US$692bn US national security budget (Bryce 2019).
Karyn Hayes-Ryan, head of Kleos US strategy, has been appointed director of Kleos US. A former intelligence community and Department of Defense senior executive, Hayes-Ryan is highly experienced in ISR as well as Federal Acquisition Regulation, procurement and integration.
She said, “A US entity in the world’s largest defence market allows us to work closely with government agencies to improve the US’ international maritime surveillance and reconnaissance capabilities, supporting its defence services both locally and abroad.
“A local enterprise with appropriate security clearance, innovation and technical capability also provides opportunities to collaborate on funded projects with defence entities within the national security framework.”
Kleos executive chairman, Air Commodore (Ret’d) Peter Round, will act as interim CEO of Kleos US while a US citizen is recruited. Round has more than 30 years’ military experience as well as five years as the European Defence Agency capability and technology director, he was on the board of UKMFTS, the largest UK PPP, and experience of directorship in a US corporation.
Kleos Space (ASX: KSS) is a space enabled, activity-based intelligence, data as a service company based in Luxembourg. Kleos Space aims to guard borders, protect assets and save lives by delivering global activity-based intelligence and geolocation as a service.
The first Kleos Space satellite system, known as Kleos Scouting Mission (KSM), will deliver commercially available data and perform as a technology demonstration.
KSM will be the keystone for a later global high capacity constellation. The Scouting Mission will deliver targeted daily services with the full constellation delivering near-real time global observation. (Source: Space Connect)
14 Oct 19. SmartSat CRC sets up new company to help space start-ups navigate path to success. The government-backed SmartSat CRC has created a new company to give small space sector start-ups a voice alongside the major players of the space industry.
SmartSat CRC industry director Peter Nikoloff said the idea was to have a single entity representing the start-ups, reducing bureaucratic red tape and giving them greater representation in the industry.
“Because we’ve got so many it’s quite difficult to manage them individually so by establishing one company it gives them experience to work on the board of a bigger organisation, but the chair of the board will be the voice for all of them so we’ve got one point of contact,” he said.
“The start-ups are the ones we’re trying to motivate to drive growth in the space sector and SmartSat CRC’s prime objective is to grow the space industry, so we really need to make sure we’re hearing from them about what their issues and challenges are as part of the CRC.”
The SmartSat CRC (Cooperative Research Centre) was launched in April to boost Australia’s growing space sector, leveraging national expertise in satellite capabilities.
That involves 99 industry and research partners include 13 global companies, 20 Australian firms, 17 universities and more than 40 space sector start-ups. The federal government contributed funding of $55m and total funding is now $245m.
The organisation has its headquarters in Adelaide and is due to move into the Lot Fourteen innovation and entrepreneurial neighbourhood, where it will be co-located with the Australian Space Agency.
Smartsat CRC’s new company offshoot is Australian Space Industry Start-up Company (ASISC), which will become a collective core partner. Start-ups will be given free company membership for the first year to assess the value of being part of the larger entity.
Nikoloff, co-founder of Adelaide defence and space company Nova Systems, said this was loosely based on a model used by the former Spatial Information CRC.
ASISC is now setting up its board, which is to be comprised of its start-up members.
“For some of the start-ups who may not necessarily have an understanding about how a formal company is managed and set up, our environment will give them that experience and we’ll also link them in with incubator and accelerator training and provide linkages to all the partners,” he said.
“We’ve got a large number of partners between universities, Australian companies and big multinationals and we’ll be creating environments where they can work together and possibly some of the start-ups might end up partnering with the bigger companies.” (Source: Space Connect)
11 Oct 19. Shareowners Approve Raytheon and United Technologies Merger of Equals. Raytheon Company and United Technologies Corp. announced that, at their respective special meetings of shareowners held today, Raytheon and United Technologies shareowners voted overwhelmingly to approve all of the proposals necessary to complete the merger of equals transaction combining United Technologies’ aerospace businesses, comprised of Collins Aerospace and Pratt & Whitney, with Raytheon.
The merger would create Raytheon Technologies Corporation, a premier systems provider with advanced technologies to address rapidly growing segments within aerospace and defense.
The transaction is expected to close in the first half of 2020, subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals, as well as completion by United Technologies of the separation of its Otis and Carrier businesses.
“I am pleased that the shareowners of Raytheon and UTC voted in favor of our powerful strategic combination,” said Tom Kennedy, Raytheon Chairman and CEO. “Today’s vote reflects a significant step on our path to unite two world-class companies with complementary technologies and supports our view that this merger of equals will create additional growth opportunities while delivering benefits to our shareowners, customers and employees.”
“Today is an important milestone in our transformational merger, which will define the future of aerospace and defense. With our technological and R&D capabilities, Raytheon Technologies will deliver innovative and cost-effective solutions aligned with the highest customer priorities for decades to come,” said Greg Hayes, United Technologies Chairman and CEO.
The final vote results on the proposals voted on at the special meetings will be set forth in the companies’ separate Form 8-Ks filed with the SEC after certification by each company’s inspector of elections. Additional information on the merger and related materials can be found on a joint transaction website at www.futureofaerospacedefense.com.
Raytheon Company is a technology and innovation leader specializing in defense, civil government and cybersecurity solutions. Raytheon is headquartered in Waltham, Massachusetts.
United Technologies Corp., based in Farmington, Connecticut, provides high technology products and services to the building and aerospace industries. By combining a passion for science with precision engineering, the company is creating smart, sustainable solutions the world needs. (Source: (Source: defense-aerospace.com/joint Raytheon/ United Technologies)
14 Oct 19. IAI readies US acquisition war chest. Israel Aerospace Industries (IAI), which aims to expand its presence in the vast US defence market, has set aside USD500m in cash to acquire US companies, according to the head of IAI’s US subsidiary.
“A large commitment has been made on the part of IAI to make purchases within the United States,” said Swami Iyer, CEO of IAI North America. “We could leverage that to do more. We could do a lot less. We’re obviously not going to buy indiscriminately.”
While many companies buy others to obtain new or unique technology, IAI is more interested in businesses that can increase the American-made content of its existing products so it can better satisfy buy-American restrictions and sell more of its wares in the US. (Source: IHS Jane’s)
14 Oct 19. UK to expand powers to block foreign takeover deals. Britain plans to strengthen its powers to block or intervene in the foreign purchase of any company that could affect national security, it said on Monday. Currently the British state can intervene in the foreign takeover of any company that plays a role in national security, the provision of media plurality or the stability of the financial system.
But setting out its new legislative agenda in a Queen’s Speech on Monday, the government said it planned to be able to intervene in deals of any size in any sector that could pose a risk to national security.
Under the plan, a notification system allowing businesses to flag to government a transaction with potential security concerns will be introduced.
The government will then be able to add conditions to the transaction, block it or add sanctions for non-compliance. Companies will be able to appeal.
The move is designed to tackle national security risks wherever they arise and reflects the fact a small company with expertise in cyber could be as important as a major defense company.
Britain has one of the most open economies in the world but it does ask for a thorough examination of the impact of certain deals and it is currently reviewing acquisitions of satellite group Inmarsat (ISA.L) and defense company Cobham (COB.L).
While Prime Minister Boris Johnson does not have a majority to pass bills in parliament, the new legislation does indicate how his party will seek to govern if it holds an election later this year. (Source: Reuters)
12 Oct 19. Serbia ditches bid to sell aircraft maintenance company. Serbia’s economy ministry withdrew the sale of JAT Tehnika, a Belgrade-based aircraft maintenance company, six days after the deadline for bidders expired. Last month the ministry offered a 99.38% stake in JAT Tehnika at a starting price of 10.25m euros ($11.42m), with Oct. 4 as the deadline for binding bids.
The ministry canceled the sale immediately due to “certain issues concerning the privatization (of the company) that needed to be addressed.”
Economy ministry officials could not be immediately reached for further comment. JAT Tehnika was formed in 2006 after it was spun off from Serbia’s now-defunct JAT Airways. It employs around 1,000 people.
The company is responsible for the maintenance of planes operated by Air Serbia. It is certified to provide full maintenance for the Boeing 737 Classic and Boeing 737NG, ATR 42 and 72 aircraft and all Airbus A320 types. A previous attempt to sell it failed in July when it attracted no bidders. (Source: Reuters)
12 Oct 19. Space firm founded by billionaire Paul Allen sold to new owner. Stratolaunch Systems Corp, the space company founded by late billionaire and Microsoft Corp (MSFT.O) co-founder Paul Allen, said on Friday it was continuing operations after transitioning ownership, but did not name the new owner. The company, a unit of Allen’s privately-held investment vehicle Vulcan Inc, had been developing a fleet of launch vehicles, including the world’s largest airplane by wingspan, to send satellites and eventually humans into space.
Allen, who founded Seattle-based Stratolaunch in 2011, died at age 65 in October.
Reuters reported in May that the company was exploring the sale of its assets and intellectual property while in the process of closing operations. It had slashed headcount.
“Stratolaunch LLC has transitioned ownership and is continuing regular operations,” a spokeswoman said by e-mail.
It declined to provide details beyond the short announcement, which also said its “near-term launch vehicle development strategy” focuses on testing reusable rocket-powered vehicles and associated flight services.
It said the company would continue operations under the new owner with a mission that “will bring the carrier aircraft test and operations program fully in-house.”
Allen’s Stratolaunch had been compared to other space ventures backed by billionaires, including Richard Branson’s Virgin Orbit, which is developing a similar but smaller high-altitude launch system to cash in on growing demand for ferrying small satellites into orbit.
While Virgin Orbit Chief Executive Dan Hart told Reuters in July his company had discussions in the past with Stratolaunch about their desire to sell, Virgin Orbit was not the buyer, a person with direct knowledge of the matter said.
The centerpiece of Stratolaunch’s strategy was its carbon-composite carrier plane, with a 117-meter (384-foot) wingspan and powered by six engines. The plane flew for the first time in April. The decision to set an exit strategy was made late last year by Allen’s sister, Jody Allen, chair of Vulcan Inc and trustee of the Paul G. Allen Trust, industry sources told Reuters.
Jody Allen decided to let the carrier aircraft fly to honor her brother’s wishes and also to prove the vehicle and concept worked, the sources said. (Source: Reuters)