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09 Oct. 22. Takeovers and weak pound put spotlight on UK aerospace and defence. British ownership renews debate over future of vital industry In the past three years, several key suppliers in the aerospace and defence sector have fallen to bids from overseas. Britain’s aerospace and defence sector has been a rare bright spot, defying the shrinking trend of the country’s manufacturing base for more than 30 years, with a core group of heavyweights such as BAE Systems and Rolls-Royce surrounded by a cluster of key suppliers. But in the past three years, several of these suppliers — Cobham, Meggitt and Ultra Electronics — have fallen to bids from overseas suitors.
Ultra and Meggitt delisted from the London market in the past two months. In September, another stalwart — privately owned Pearson Engineering, based in Newcastle — was sold to an Israeli company. The contracting British ownership of a vital industrial sector has renewed debate about its long-term prospects. Companies still recovering from the Covid-19 pandemic face new headwinds of inflation and rising interest rates, while the weakness of the pound has heightened expectations that more groups will fall prey to suitors. Kevin Craven, chief executive of ADS, the aerospace industry trade group, said he expected more UK companies to draw interest from overseas. “The weak pound, on top of the UK’s attractive engineering skills, means there will be a higher amount of [takeover activity]. I expect there to be more interest from foreign buyers,” he said. A Meggitt employee repairs a bottle used for fire suppression in aircraft. The company was acquired by US corporation Parker Hannifin in September 2022 Sir Nigel Rudd, who as chair sold Boots and Meggitt, said he expected successful companies to remain vulnerable. He added that there were two big issues driving the rush of takeovers across UK markets: the valuations of similar companies in the US were typically 20-30 per cent higher than those of UK peers and British investors “hate debt”. “The problem is UK companies can’t buy US ones. They don’t have the firepower to do it . . . And as a rule, UK investors are pretty risk averse.” Even before the pandemic, Britain’s position as the world’s most important aerospace and defence market after the US had already been weakened by Brexit.
Apart from the additional bureaucracy, the UK has been shut out of important pan-EU research programmes. New figures from industry trade body ADS show Britain’s civil and military aerospace activities generated a turnover of £22.4bn in 2021 — 37 per cent lower than that recorded before the coronavirus crisis. In contrast, although hit by the pandemic, data from Germany’s trade body show the sector, which for decades trailed the UK, has consolidated its recent lead with revenues of €31.4bn or £27.8bn in 2021. Craven said the UK figures still reflected the impact of Covid-19 and stressed that there was no evidence yet of a “structural shift or diminution of the UK’s competitiveness”. One challenge for British companies, however, was the skills shortage, with some groups struggling to rehire people as the aerospace market recovers, he said. Craven also cautioned against a “knee jerk reaction” that all takeovers were “a bad thing”, noting that the focus should be on “making sure that key assets are retained in the UK with the right assurances around how the integration [with the acquiring company’s operations] might happen”. In the cases of Meggitt and Ultra, the government reviewed both takeovers before ultimately giving the green light after extracting a series of commitments from the respective buyers. Both America’s Parker Hannifin, which took over Meggitt, and private-equity backed Cobham, which bought Ultra, have promised to protect sensitive technology and beef up spending on research and development. The takeover of Ultra, which makes submarine-hunting equipment as well as control systems for the fleet of Trident submarines that carry the UK’s nuclear deterrent, caused particular concern over national security. Meanwhile, Israel’s Rafael Advanced Defense Systems, which took over Pearson Engineering, said the deal would lead to an increase in the number of jobs in Newcastle. Nevertheless, some industry experts question whether the rush of takeovers could lead to a hollowing out of the sector’s closely integrated supply chains. Others are worried that critical research and the development of technologies for electric and hydrogen aviation might not take place in the UK if the owners are not committed for the long term. In aerospace, the government this year committed more funding towards the development of new technologies through the Aerospace Technology Institute, set up in 2014 to allocate state funding for innovation in the sector. However, some industry executives stress that deeper funding will be needed to realise the UK’s ambitions to be a leader in net zero aviation. “The UK by virtue of Brexit has not only made itself much less attractive as a manufacturing base due to things like additional paperwork, but it has also got itself out of all of the EU-funded R&D programmes,” said one former small business owner. Paul Everitt, former ADS chief executive, said the UK was a strong player in the industry, with big global companies, including BAE and Babcock International, and inward investment from leading European groups such as Airbus and Leonardo. But added that Britain does face challenges “further down the supply chain”. “Meggitt, Ultra and others were the route to market for the smaller manufacturing and engineering businesses in the UK,” he said. In defence, several executives said the government needed to encourage a more focused procurement approach, rewarding companies based in the UK and offering a reliable stream of contracts. This, they said, would help drive innovation and domestic capabilities. “With the pound so cheap, it makes a lot of the UK companies vulnerable to takeover and the government needs to insist the research and development activities stay in the UK,” said Kevan Jones, a Labour member of the House of Commons defence select committee. (Source: Google/FT.com)
07 Oct 22. ZeroAvia Acquires Leading Fuel Cell Stack Innovator HyPoint.
- Hydrogen-electric aviation pioneer strengthens product roadmap with addition of world-leading HTPEM fuel cell stack technology and team
- News follows announcement of deal signed with PowerCell for delivery of LTPEM fuel cell stacks, giving ZeroAvia a strong position across the fuel cell technology spectrum
ZeroAvia, the leader in developing zero-emission solutions for commercial aviation, today announced that it has acquired in full the leading fuel cell stack innovator HyPoint. The financial terms of the deal were not disclosed.
The acquisition adds HyPoint’s advanced high-temperature fuel cell technology—a promising avenue for increasing power output and energy density of aviation fuel cell powertrains—to ZeroAvia’s already leading expertise in developing the full powertrain to enable hydrogen-electric flight.
All 40 HyPoint team members will be integrated into ZeroAvia, working across the R&D locations in Kemble, Gloucestershire, and HyPoint’s location in Sandwich, Kent. HyPoint’s CEO Alex Ivanenko joins ZeroAvia as GM for VTOL and New Segments, to develop ZeroAvia’s rotorcraft business applications, and to explore other applications outside ZeroAvia’s core focus on fixed-wing commercial aviation.
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All of HyPoint’s engineering team will join ZeroAvia’s Hydrogen Power Generation Systems (PGS) division led by Rudolf Coertze, CTO Hydrogen, combining two rare sets of exceptionally talented fuel cell researchers and engineers working in the field today.
The two companies have worked closely together on co-developing and testing HTPEM fuel cell technology as part of ZeroAvia’s powertrain development over the last couple of years, with HyPoint relocating the bulk of its R&D into the UK in February 2022 to support the partnership. HyPoint has garnered recognition as an innovator developing technology with the potential to significantly expedite the introduction of fuel cell propulsion into larger aircraft. This early partnership was part of ZeroAvia’s work within the HyFlyer II programme, supported by the UK’s ATI Programme.
Val Miftakhov, ZeroAvia, Founder & CEO, said: “We see this as a significant forward step for ZeroAvia, and a hugely important strategic step to strengthen our leadership position in hydrogen-electric powertrain development for aviation. There are no other organizations with the breadth of expertise and world-leading IP in hydrogen-electric aviation that we now have within the company. This acquisition, together with our long-standing partnership with the leading LTPEM (low-temperature PEM) fuel cell maker PowerCell, puts us in the top position for delivering the most environmentally and economically attractive solution to aviation’s growing climate impact.”
Alex Ivanenko, former CEO of HyPoint and newly appointed GM for VTOL and New Segments at ZeroAvia, said: “This acquisition is the natural next chapter in our journey, allowing us to tap into the benefits of the larger and strategic resources that ZeroAvia has to offer. It will accelerate our product development and, as a result, partners from different market segments will get mature products based on novel turbo-air cooled HTPEM hydrogen fuel cells. The team and I are excited to join forces with ZeroAvia to achieve the ambitious vision and product roadmap for zero-emission aviation.”
This new development comes on the heels of the announcement of a major deal with ZeroAvia’s long-term fuel cell partner PowerCell which will see the serial delivery of hydrogen fuel stacks beginning in 2024. Together, these moves will allow ZeroAvia to progress both LTPEM and HTPEM technologies for relevant aviation applications from a strong position of leadership.
ZeroAvia has identified hydrogen-electric powertrains—where fuel cells use hydrogen in a chemical reaction to generate electricity that powers electric motors—as the most practical, economical, and farthest reaching solution for reducing aviation’s climate change and clean air impacts. (Source: ASD Network)
06 Oct 22. Raytheon set to profit from strategic lessons of Ukraine. Since 24 February 2022, the day Russia invaded Ukraine, the MSCI World index has contracted by 23.9 per cent, hardly surprising given the confluence of events. Yet over the same period, three of the five largest defence contractors have registered double-digit share price growth, with shares in BAE Systems (BA.) up by 50 per cent. Only Boeing (US:BA) has bucked the trend, although the aerospace giant’s woes are primarily linked to its civil aviation business.
The conflict in Ukraine is obviously a disaster from a humanitarian perspective, but the cold reality is that it will inform defence procurement decisions for the next decade, perhaps even longer. And with a seemingly dwindling number of viable investment options on offer, investors may be taking a closer look at sectors with counter-cyclical characteristics.
In these pages, Robin Hardy recently looked at the case for exposure to defence stocks, but if we assume that the rationale for gaining exposure to the industry has gained impetus, there must be specific areas of defence procurement that will be prioritised within national defence budgets. And those budgets are only moving in one direction due to the conflict in Ukraine.
In the three months following Russia’s invasion, European nations announced an aggregate increase of nearly €200bn (£176bn) to their defence budgets, but given their historical reluctance to boost defence spending, there must be doubts whether they will make good on their rhetoric. Perhaps the dread of renewed conventional warfare elsewhere in Europe will have a galvanizing effect.
Two interrelated areas of defence research and development (R&D) that stand to benefit from Russia’s aggression are unmanned aerial vehicles (UAV) and advanced missile systems. One of the most effective – and well-publicised – technologies being supplied to Ukraine is the High Mobility Artillery Rocket Systems, or HIMARS, produced by Lockheed Martin (US:LMT), while the Norwegian Advanced Surface-to-Air Missile System (NASAMS) developed by Kongsberg Defence & Aerospace and Raytheon Missiles & Defense has also featured prominently in Ukraine’s defensive efforts. Even a relatively low-cost option, Tukey’s Bayraktar TB2 UAV, has had a major impact on proceedings, no doubt forcing a strategic rethink in relation to battlefield technologies.
We have previously outlined why BAE Systems is a frontrunner in the development of next generation UAVs, but another company that is particularly well placed to profit from the lessons of Ukraine is Raytheon Technologies (US:RTX), a high-tech defence contractor we first highlighted in 2016. It is comprised of four specialised businesses: Collins Aerospace, Raytheon Intelligence & Space, Pratt & Whitney, and Raytheon Missiles and Defense. The last member of that quartet contributed 23 per cent of the group net income of $67.3bn (£60.8bn) in 2021, but a third of operating profits, with both measures significantly in advance of 2020 performance.
And things are looking up. Last week, the group beat out rivals Lockheed Martin and Boeing to secure a $985mn, 54-month contract from the Pentagon to develop prototypes for a hypersonic attack cruise missile alongside Northrop Grumman (US:NOC). It provides Raytheon and Northrop Grumman with a march on their rivals in advance of a slew of high-value contract awards expected in the years ahead. It also comes less than a month after the former contractor was awarded a $972mn contract to supply the US and other militaries with Advanced Medium Range Air-to-Air Missiles.
Through to the end of last year, Raytheon delivered a cumulative five-year return of 23.3 per cent. Although this compares unfavourably with the 27.7 per cent return on the S&P 500 index, its relative performance was negatively impacted by Pratt & Whitney’s exposure to the civil aviation sector. Sales and profitability for the division were well adrift of 2019 levels at the end of last year, although it recently delivered its one-thousandth F-135 military engine. Military contracts have provided an important buffer since commercial aviation was effectively grounded due to the pandemic, but passenger demand is growing again, albeit more gingerly than anticipated.
Minus $2.12bn in capital expenditure, the group generated free cash flow of $5.01bn in 2021 and is looking to double that figure by 2025. A tall order, perhaps, but cash profits are predicted to increase by 30 per cent. Investors certainly haven’t been ignoring the aerospace/defence sector in the lead-up to war in Ukraine, and judging by the group’s PEG and P/BV ratios (both at 1.7), its growth prospects are fully priced in. However, it trades below the sector average on that basis at a 24 per cent discount to its consensus target price, and, along with BAE Systems, is well placed to drive growth from the unfolding strategic narrative. (Source: Investors Chronicle)
06 Oct 22. Chemring Group Plc.(“Chemring” or “the Group”) FY22 Trading Update And Contract Wins.
FY22 Trading update.
Trading in the period to 30 September 2022 has progressed as planned, despite the challenging macro-economic environment in which we continue to operate.
Expected FY22 revenue is fully covered by the order book and the outturn for the year ending 31 October 2022 is expected to be in line with the Board’s expectations.
As previously announced, the results for the year ending 31 October 2022 will be released on 13 December 2022.
The Group has received a number of significant orders during the period, detailed below. As at 30 September 2022, the order book was £678m (30 April 2022: £488m), with £40m of the increase attributable to FX translation arising from the stronger US Dollar. Order cover for FY23 is building, with Countermeasures & Energetics having 93% order cover of expected revenue and the shorter cycle Sensors & Information sector having 60% cover.
Contract awards – Roke
In the Sensors & Information sector our specialist consulting and technology business, Roke, has received a significant award under the Serapis* framework contract with the UK Government. This contract – Hyperion – will develop the next generation of phased array radar technologies to address the challenges associated with hypersonic missile defence. The programme is sponsored by the UK Missile Defence Centre. Following an initial one year scoping study Hyperion is entering the second of four years to conduct demonstration phase activities culminating in a trials programme. The total budget for Hyperion is £30m with the demonstration phase valued at £26m. Hyperion will be delivered by Roke through the DSTL Serapis Lot 1 framework.m Activity at Roke has remained extremely buoyant with order intake in the year to date at £156m (2021: £89m) up 75%. Of this £29m is ‘pass through’ revenue under larger framework contracts, but after excluding this, order intake for Roke delivered products and services was up 60%.
As a result of this strong order intake we expect Roke to achieve another record year in FY22, with revenue exceeding £100m for the first time. This growth has been supported by increased headcount, with Roke now employing 828 people (2021: 611), including our 2022 intake of 71 graduates and apprentices who joined in September, and the first Roke Academy cohort of 24 who joined in July.
Contract awards – Countermeasures & Energetics
In the Countermeasures & Energetics sector Chemring’s US subsidiary, Chemring Countermeasures USA (“CCM USA”) has been jointly awarded a $225m Indefinite Delivery / Indefinite Quantity (“IDIQ”) framework contract to manufacture MJU-61A/B infra-red countermeasures. This contract includes a five-year ordering period, with work expected to be completed by August 2027. An initial delivery order was placed at the time of the award split 60% in favour of CCM USA and 40% in favour of Armtec Countermeasures. CCM USA’s initial delivery order was $10m. This initial award was followed by a further award of $28m, which was made 100% in favour of CCM USA. All work will be performed at CCM USA’s new fully automated-manufacturing facility at Toone, Tennessee.
CCM USA also received firm-fixed-price contracts totalling $36m to manufacture MJU-64/B, MJU-66/B and XM219 aircraft decoy flares. All work will be performed at CCM USA’s facility in Chester Township, Pennsylvania. In the UK, Chemring Countermeasures UK (“CCM UK”) received a five-year contract valued at £34m to supply 55mm MTV air countermeasures. CCM UK also received a £4m order to deliver naval countermeasures. These international orders build on CCM UK’s existing order book and provide strong manufacturing demand throughout 2023 and beyond. All work will be performed at CCM UK’s facility near Salisbury, UK.
Our three niche Energetics businesses, which design and manufacture high precision engineered devices and specialist materials, have also seen strong customer demand with order intake up 63% to £116m (2021: £71m), demonstrating the value our customers place on the high-reliability products provided by Chemring in the critical areas of space, aerospace, defence and industrial markets.
These significant order wins and growth in order intake across both sectors demonstrates customer confidence in Chemring to develop and supply highly effective solutions and builds on our order cover for FY23, positioning the Group well for the future.
Balance Sheet
The Group’s balance sheet remains robust, with net debt throughout the period at less than 0.5x EBITDA and banking facilities of c£160m which run to 31 December 2024, with options to extend. Increasing interest rates are not expected to have a material impact on the Group.
* Serapis is a framework contract that enables DSTL, MOD and the frontline commands to quickly and efficiently place contracts for scientific and technical research and development. Serapis focuses on developing and bringing into operation new and battle-winning capabilities in: C4ISR (command, control, computers, communication, intelligence, surveillance and reconnaissance), space systems, synthetic environments and simulation technology to support human capability development. Roke is the Prime Contractor for Serapis Lot 1.
06 Oct 22. Lockheed searches for homegrown sustainment talent. Lockheed Martin has launched a new initiative to find Australian businesses that can help the sustainment of the RAN’s expanding Seahawk fleet and Army’s proposed Black Hawk fleet.
The prime said it’s calling for potential suppliers with “homegrown talent and expertise” to expand its existing footprint of 200 personnel working on Sikorsky helicopters.
Interested businesses can register an expression of interest in its Australian Industry Capability Network (ICN) Gateway until the end of June 2023.
In September, the Royal Australian Navy (RAN) placed a fresh order for 12 MH-60R Seahawk/Romeo helicopters in a deal tipped to be worth over $2.5 bn. It adds to the 24 acquired from 2013.
The federal government is also mulling a purchase of 40 Black Hawks to help replace its troubled fleet of 47 Taipans.
On Thursday, Lockheed Martin Australia said it was calling for suppliers with experience in manufacturing of aero-mechanical components and aerostructures, aerospace component maintenance and repair, development of logistics and engineering management tools.
Chief executive Warren McDonald said, “We are committed to working with like-minded Australian industry partners to grow our existing rotary-wing sovereign sustainment supply chain to reinforce Australia’s industrial self-reliance and ensure cost-effective solutions for our Defence.
“Through partnering with industry, we provide the opportunity to elevate their capability to the world stage and support industry to access global supply chains.”
Christopher Hess, Lockheed Martin Australia’s head of industrial development, who leads the Office of Australian Industrial Participation, said, “We are proud to have provided unprecedented opportunities to Australian industry, engaging with over 2,500 Australian companies, introducing some 400 new companies to the Defence industry space as well as facilitating over 150 export contracts since 2012. We look forward to increasing Australia’s sovereign rotary-wing supply chain base.”
Sustainment will be needed on RAN’s soon-to-be-fleet of 36 Seahawks, with new platforms arriving between mid-2025 and mid-2026.
The deal, which forms part of the Commonwealth government’s Project SEA 9100 Phase 1 (Improved Embarked Logistics Support Helicopter Capability) — is expected to provide the RAN’s Fleet Air Arm with a third Romeo squadron.
The Fleet Air Arm’s 725 and 816 squadrons — based out of Nowra, NSW — have accumulated more than 30,000 flight hours, deployed from frigates, destroyers and supply ships.
The helicopters have been sustained by Sikorsky Aircraft Australia Limited, also based in Nowra.
The deal for Black Hawks, however, is still unconfirmed, with new Defence Minister Richard Marles arguing the commitment from the previous federal government was “pretty fuzzy”.
“A process is underway that is evaluating that capability in terms of what we have now and what we need in the future. I’m not going to pre-empt it now,” he said, referencing the Albanese government’s upcoming Defence Strategic Review.
Last year, the former Morrison government went as far as to send a letter of request to the United States so Australia could purchase UH-60M Black Hawks for AU$2.79bn. (Source: Defence Connect)
05 Oct 22. Etion Create now officially part of Reunert stable. In May this year, Etion Group and Reunert announced the intended change of ownership, which was finalised and concluded on 3 October. Through this action, Reunert has now acquired 100% of the issued shares in Etion Create, for R202m.
Etion Create is in the process of integration into the Applied Electronics segment of the Reunert group, and will provide it with original design capability for the design integration and support of advanced technology in the mining and industrial; defence and aerospace; Internet of Things; sensors; and cyber security market segments.
Reunert already has an electronic manufacturing capability but this will be improved through the acquisition of Etion Create, which also has very good access to markets Reunert participates in, and has secured contracts in those markets.
“Reunert wishes to expand its Applied Electronics segment and believes that the augmentation of its existing assets with the strategic positioning, value proposition and original design manufacturing skills of Etion Create will accelerate these ambitions,” the company said earlier this year.
Announcing the conclusion of the acquisition this week, Reunert and Etion Create said they “look forward to exploring further areas of collaboration now that Etion Create is part of Reunert Applied Electronics, to the mutual benefit of all our stakeholders.”
“Both Reunert and Etion Create view sustainable transformation as a cornerstone of our responsibility as corporate citizens. Therefore, continued improvement in Etion Create’s B-BBEE level remains key for the future. Reunert brings with it a broad-based black economic ownership structure which includes a comprehensive Employee Share Option Programme resulting in 48.93% black ownership, 32.46% black women ownership and 12.65% black youth rating which will support Etion Create’s improved rating.”
Etion Create (formely Parsec) offers products and services such as signal processing platforms for radar, signal processing units for electronic warfare, weapons integration and weapon control systems, military standard communication interfaces, mission computers and display electronic units, secure communications, and test equipment. Etion Create previously developed camera sensor electronics for an optical helmet tracker solution for the Eurofighter and Gripen fighter jets used by European air forces as well as the South African Air Force. One of its other key products is the CheetahNAV tactical navigation system for light military vehicles.
Etion began disposing of some of its assets last year and has disposed of LawTrust, Etion Connect, Etion Create and Parsec Properties. LawTrust was acquired by Altron and Etion Telecommunications acquired Etion Connect in September for R71m. (Source: https://www.defenceweb.co.za/)
05 Oct 22. GKN Aerospace Acquires Additive Systems Leader to Make a Step Change in Industry Sustainability.
- GKN Aerospace has acquired Sweden-based Permanova Lasersystem AB to enhance additive manufacturing (AM) capability within its industry-leading Engines business
- Strategic acquisition also simplifies its supply chain, with Permanova an existing supplier of laser metal deposition systems for GKN Aerospace sites across Europe
- The investment will help drive growth and enable more sustainable and cost-effective materials solutions for both GKN Aerospace and its global customer base
GKN Aerospace has acquired a pioneering Swedish additive manufacturing system business, as part of its Engines business’s journey to transform its supply chain and offer more sustainable and advanced material solutions to customers.
Permanova Lasersystem AB, based in Gothenburg, is a leader in advanced laser technology and cell integration and a current supplier of laser welding and laser metal deposition systems to GKN Aerospace. GKN Aerospace is already a world-leader in laser metal deposition for complex engine components, with AM components flying today on multiple platforms. The acquisition will strengthen GKN Aerospace’s additive fabrication offer, accelerate large scale AM industrialisation and enable significant future business growth.
It is also a major milestone in its sustainability journey, with additive manufacturing reducing material and energy usage by up to 80% compared to traditional manufacturing techniques. The widespread adoption of AM will be an important aspect of the aerospace industry’s commitment to achieve net zero emissions by 2050.
Engines President, Joakim Andersson, said: “Permanova represents a perfect strategic fit for us. Additive manufacturing success requires three core capabilities: product know-how, process control and systems design. This acquisition gives us strategic control of the systems design element so that we now have deep expertise in all three areas. That is a game-changer for GKN Aerospace as it will enable us to accelerate the deployment of AM at scale. Ultimately, that will help us grow our shares in existing and future Engine platforms and deliver a more sustainable future for aviation. We have an exciting journey ahead and I am delighted to welcome Permanova to the GKN Aerospace family.”
Håkan Grubb, CEO of Permanova Lasersystem added: “We are very excited to join the GKN Aerospace family. It is a company we have worked with for many years and have always had a strong partnership with and I am excited to work closely together to bring additive solutions to the market. Permanova Laser system is well recognized for its laser technology and integration expertise and together with GKN Aerospace we look forward to boosting the development of efficient and green fabrication solutions, powering the future of sustainable flight.” (Source: ASD Network)
05 Oct 22. Minister supports Denel turnaround plans. It was evident on the sidelines of the Africa Aerospace and Defence (AAD) 2022 exhibition that Denel was getting strong support for its turnaround plans. Flanking Minister of Public Enterprises Pravin Gordhan at a briefing last week in Denel’s hospitality suite were some Denel board members, Armscor chairman Philip Dexter, and Transnet chief executive Portia Derby. Also present were numerous aviation and defence industry executives.
After Denel experienced corruption, state capture and malfeasance, the minister said he was pleased that Denel was in the phase of stabilising, sustaining, growing, and innovating. “In fact, this applies to the country as a whole, with most state-owned enterprises getting there.”
He referred specifically to Eskom, which he noted would look substantially different in the next couple of years. In Eskom’s generation business, partnerships similar to those Denel is building will be implemented. These will take the form of public-private partnerships, particularly in the renewable energy space with bns of rands worth of investments.
“Once this is implemented, around 2023 and 2024, thousands of megawatts will come onto the grid,” the minister affirmed.
He believed that entities like Denel, Armscor, the SANDF and the police services, are all important defenders of the nation’s sovereignty.
“It is critical that the new path Denel’s Board and Management have embarked upon, succeeds and is supported by us all, including the wider industry sector,” he stated. “You as industry also suffered under State Capture, because the business you used to get from Denel no longer came through.”
He emphasised that the manufacturing sector that has been shrinking worldwide, must be reactivated. For that to succeed, much more energy, support and sustenance are required for innovation, especially since Denel was known for innovation – as is also the case with industry in South Africa.
Addressing the industry executives present, he said “innovation keeps you ahead of the competition, it’s your ability to develop new products, to understand your markets, to make what your clients want, all of which determines if you are in the game or out of it.”
In closing, Gordhan mentioned how he interrogated all the Denel business sections at the show on how well they were performing and whether they would be generating the cash that is required to take the business forward.
“The industry has been through a rough time, but I hope we can reintroduce integrity, in Denel and the industry as a whole, because integrity is an important part of building a nation and business that can stand on its feet,” Gordhan concluded.
For his part, Mike Kgobe, acting Group Chief Executive Officer, said he was proud of Denel’s presence at Africa Aerospace and Defence 2022. “As much as Denel is in the process of rebuilding, Denel is back here at this, the most important aerospace, defence, and security show on the African continent.”
He noted that the Covid-19 pandemic, and resultant economic downturn, coupled with regional and global insecurities, have left a negative imprint on the local industry’s business. However, the South African aerospace and defence industry is renowned for its resilience to bounce back, to adapt and to innovate.
With a two decades long career in Denel’s aeronautics business, Kgobe said he was looking forward to contributing and rebuilding the business based on his institutional knowledge and experience.
“Denel is back, and is busy redefining its future,” he stated. “It might be in a different shape and in different structures, but the essence of Denel will remain. It is a valuable asset that plays a key role in the country’s sovereignty.”
He said the commitment and purpose have survived the ravages of State Capture as was laid bare at the judicial commission of enquiry. Yet, despite its fortunes that have declined, Denel is not at an end and will indeed thrive. His confidence is based on the quality of Denel’s products, its support structures, long-standing relationships and partnerships with customers and stakeholders, the quality of its personnel, and the strong support from stakeholders, the board and the shareholder as represented by the Minister of Public Enterprises.
“Some uncomfortable decisions will have to be made in the near future, which will be implemented to strengthen Denel into the future,” Kgobe stated.
Riaz Saloojee, Denel’s chief restructuring officer, repeated some of his remarks outlined at a recent media briefing on the comprehensive strategy for the Denel Group. He explained that he was brought on board three months ago to assist in rebuilding Denel.
He explained that a roadmap has been charted, which is focused on a streamlined and sustainable company with the ability to significantly grow its order pipeline and access new revenue streams.
“The question is whether Denel is relevant, and the answer is that its mandate is derived from among others the Defence White Paper, but fundamentally from its support of the SANDF,” he stated.
Denel’s prime role is supporting the South African National Defence Force (SANDF) to execute its constitutional mandate to safeguard the country’s citizens and territorial integrity. It is the custodian of key strategic capabilities of the SANDF. As an original equipment manufacturer (OEM) and maintenance repair (MRO) facility for numerous critical equipment systems Denel enables much of the SANDF’s combat capability.
He believes it was critical to effect a restructuring to retain strategic capabilities, particularly as the defence force needs Denel’s support as the custodian of critical capabilities both internally and externally.
He cited the United Nations (UN) peace support operations in the eastern Democratic Republic of Congo (DRC) in which South Africa is involved, and the SADC mission in northern Mozambique. Denel provides technical support of SANDF equipment, including during recent floods in KwaZulu-Natal, as well as the July unrest in that province.
(Source: https://www.defenceweb.co.za/)
04 Oct 22. Tidal Cyber Closes $4m Funding Round to Continue Making Threat-Informed Defense Achievable. Tidal Cyber, a leader in threat-informed defense technology, today announced the closing of a $4 m funding round led by Ultratech Capital Partners. The funding will be used to expand Tidal’s SaaS-based threat-informed defense platform and ramp up customer acquisition.
The number of cyber-attacks continues to grow each year, making it more important than ever for enterprises to adopt more proactive cybersecurity measures. Threat-informed defense gives companies a more strategic means of defense by focusing on the tactics and techniques used by the adversaries most likely to target them.
The Tidal Platform is purpose-built to make implementing threat-informed defense simple and streamlined.
The Tidal Platform is purpose-built to make implementing threat-informed defense simple and streamlined. The Tidal Community Edition, the free-to-use base offering of the platform, was made generally available at Black Hat USA in early August. It features enriched technique data from MITRE ATT&CK® and other open-source sources, as well as the Tidal Product Registry™, a curated repository of vendor-supplied data mapped to specific adversary behaviors. The Tidal Community Edition was named a Top Cybersecurity Product Unveiled at Black Hat 2022 by CSO Online.
“We are incredibly proud of the rapid progress we have made to date and are excited to achieve this important milestone,” said Tidal co-founder and CEO Rick Gordon. “This capital will provide us with resources we need to enable enterprises of all sizes to achieve a threat-informed defense. We are thrilled to be working with the Ultratech team and with an incredible group of experienced security investors on this important mission.”
In addition to Ultratech, new investors participating in the fundraising are Access Venture Partners, TFX Capital, VIPC Virginia Venture Partners, Dreamit, and Adam Vincent. Existing investors participating in this round include First In™, BlueWing Ventures, SaaS Ventures, Riverbend Capital, Blu Venture Investors, and StoneMill Ventures.
Future plans for the Tidal Platform include an enterprise edition with enhanced features including reporting using the Tidal Confidence Score™, which will help enterprises effectively evaluate and communicate their cyber risk reduction.
To stay up to date on the of the latest news surrounding Tidal Cyber, please visit www.tidalcyber.com.
About Tidal Cyber:
Founded in January 2022 by a team of threat intelligence veterans with experience at MITRE, the U.S. Department of Homeland Security, and a wide range of innovative security providers, Tidal Cyber enables businesses to implement a threat-informed defense more easily and efficiently. The Tidal Platform helps our customers map the security capabilities of their unique environment against the industry’s most complete knowledgebase of adversary tactics and techniques, including the MITRE ATT&CK® knowledge base, additional open-source threat intelligence sources, and a Tidal-curated registry of security product capabilities mapped to specific adversary techniques. The result is actionable insight to track and improve their defensive coverage, gaps, and overlaps. For more information, please visit: www.tidalcyber.com.
About Ultratech Capital Partners:
Ultratech Capital Partners is a specialist investor in early to growth stage technology enterprises developing software, systems, and processes that solve key generational challenges, are deemed essential for long term national security and are highly transferrable across multiple sectors. Ultratech invests where a company and its team demonstrate compelling investment factors and can become pureplay enterprises of scale. Over the last 18 months Ultratech Capital Partners had deployed capital in ten early-stage companies through its ‘Critical Technology’ fund and made a number of follow on investments. (Source: PR Newswire)
04 Oct 22. HDT Global Announces the Acquisition of Federal-Fabric-Fibers, Inc. HDT Global (HDT), a leading manufacturer and integrator of highly-engineered unmanned, platform, and expeditionary solutions across defense, aerospace and government markets, announced today the acquisition of Federal-Fabrics-Fibers, Inc. (3F), a manufacturer of advanced woven and non-woven air-supported products for the US government located in Lowell, MA.
In operation for 85 years, HDT is the world leader in the design and production of expeditionary solutions for austere locations. Known for our state-of-the art, rapidly deployable rigid wall and soft wall shelter systems, HDT’s mobile infrastructure solutions are used by the US armed forces and allied foreign military. With this completed transaction, HDT adds Federal-Fabrics-Fibers’ line of 2- and 3-D shaped woven technology (AirBeam) shelter systems to its already impressive line-up of folding frame and air-supported soft wall shelters.
“HDT is pleased to welcome the Fed-Fab employees to our team,” stated Juan A. Navarro, HDT Global President and CEO. “Founded in 1991, Federal-Fabrics-Fibers has a proud history of service to the warfighter, and we look forward to integrating their people, products and processes with our team of customer-focused employees.”
“3F’s rapid prototyping capabilities and three decades of experience with lightweight specialty fabrics perfectly complements our robust offering of expeditionary shelter solutions,” added Michael J. Silvestro, SVP and Sector General Manager, Expeditionary Systems. “With today’s acquisition, HDT – already the leading provider of both inflatable AirBeam and framed shelter systems to customers focused on rapid set up and strike capabilities – further expands our ability to deliver leading-edge solutions for multidomain operations worldwide.”
About HDT: Headquartered in Solon, Ohio, USA, HDT Global is widely recognized for its industry-leading production of state-of-the-art, fully integrated unmanned, platform, and expeditionary solutions, including robotics, specialty transport vehicles, shelters, power generation equipment, environmental control systems, air filtration devices and other engineered technologies currently used by U.S. and allied military worldwide, as well as civilian government and commercial customers. Proven solutions for extreme environments. We’re there with you. For more information, visit www.hdtglobal.com. (Source: PR Newswire)
04 Oct 22. Satellite provider York Space valued at over $1bn in stake sale – source. Small satellite provider York Space Systems was valued at $1.125bn in a majority stake sale to aerospace-focused private equity firm AE Industrial Partners, a source familiar with the deal said on Tuesday. AE disclosed the deal earlier in the day without providing details. BlackRock Private Equity Partners has agreed to participate in the deal, the company added. The source requested anonymity because the terms were confidential. AE Industrial declined to comment further while York Space did not immediately respond to a request for comment. Denver, Colorado-based York Space provides small satellites and satellite components to its clients including the U.S. Space Development Agency and several commercial entities. The company, founded in 2012, has the capacity to produce over 750 satellites per year. The deal comes as the United States tests its satellite resiliency to threats from China and Russia on fears it might lose its dominance in space. (Source: Google/Reuters)
04 Oct 22. Fokker Services & Fokker Techniek Rebrand to Become Fokker Services Group.
- Fokker Services, an independent aerospace service provider, and Fokker Techniek, a world leading aircraft maintenance and completion company, have now rebranded to become Fokker Services Group.
Fokker Services, an independent aerospace service provider, and Fokker Techniek, a world leading aircraft maintenance and completion company, have now rebranded to become Fokker Services Group.
Roland van Dijk, Co-CEO of Fokker Services Group, said: “Our mission has always been to provide flexible solutions that fit our customers’ needs. By uniting these two companies, we bring together a diverse set of capabilities and expertise. As Fokker Services Group, we offer innovative total support solutions to the entire aerospace aftermarket.”
Fokker Services Group has five facilities across Europe, Asia, and the Americas. The company will continue to deliver a wide variety of aftermarket products and services, including aircraft MRO, component MRO and programs, modifications, engineering services, spare parts delivery and manufacturing, as well as VIP and special mission conversions and completions. While the original Fokker Services and Fokker Techniek company names will remain for legal contracts, this rebranding unites the diverse products and services under one group.
Fokker Services Group Dark Blue Logo Website
Menzo van der Beek, Co-CEO of Fokker Services Group, added: “Since the acquisition of Fokker Services and Fokker Techniek in March 2021, our teams have worked closely together to ensure the success of shared projects. Together, we are taking a leading role in the aerospace aftermarket, while focusing on innovation, advanced processes, engineering excellence, strategic partnerships and our great teams.”
(Source: ASD Network)
03 Oct 22. L3Harris to buy Viasat’s Link 16 portfolio, expand JADC2 offerings. L3Harris Technologies agreed to buy Viasat’s tactical data link business for roughly $1.96bn, a move officials with the defense and IT company say will extend its reach into the Pentagon’s ambitious communications overhaul known as Joint All-Domain Command and Control.
The prospective acquisition, announced Oct. 3 as financial markets opened, consists of Link 16 Multifunctional Information Distribution System platforms, their associated terminals, which are installed in tens of thousands of U.S. and allied systems worldwide, and space assets.
Link 16 is a secure, jam-resistant and high-speed line of communication used across domains and by international players including NATO.
“This acquisition is part of our strategic effort to ensure operators have access to the most advanced, multi-function Joint All-Domain Command and Control solutions available,” said L3Harris CEO and Chairman Christopher Kubasik. “Viasat’s TDL product line naturally aligns with our proven communication capabilities, and we are excited to partner with our customers and coalition allies as we modernize the Link 16 enterprise.”
JADC2 represents the Defense Department’s vision of a seamlessly connected military, one where information flows across land, air, sea, space and cyber and where coordination with foreign partners is more effective than ever.
The Army, Navy and Air Force have their own contributions to JADC2: Project Convergence, Project Overmatch and the Advanced Battle Management System, respectively.
L3Harris in mid-September was named to the ABMS Digital Infrastructure Consortium alongside four other companies. The league is meant to accelerate development of ABMS, a next-generation command and control method.
“We’ve been spending a lot of time listening to our customers, obviously, about the importance of JADC2 and the necessity to combine and integrate these different domains,” Kubasik told C4ISRNET. “Link 16, I think, is a key part of that, and positions us well for the future.”
Air Force Secretary Frank Kendall considers the realization of ABMS an operational imperative — an effort marked by intense focus and investment, seen as necessary to beat China in a potential conflict.
Kendall earlier this year said the service was working on Link 16 modernization, after lawmakers raised concerns about delays. Language included in a draft of the annual defense bill directed the Government Accountability Office, a watchdog, to review the status of the cryptographic upgrade, identify challenges it still faces and find ways to speed schedules.
“As we’ve gone through the last 20 years of being focused on counterterrorism, counterinsurgency campaigns where there wasn’t a sophisticated threat to our data links, that’s been neglected, quite frankly,” Kendall said April 27.
Radios need to be bought and replaced in order to support the modernization, which takes time, he added.
The pending sale is expected to net Viasat some $1.8 bn, after taxes and other fees. The data link business, part of satellite giant Viasat’s Government Systems division, generated approximately $400 m in yearly revenue. Link 16 accounts for one-third of Viasat’s government business.
L3Harris was the No. 10 largest defense contractor by revenue in the latest Defense News rankings. Viasat was No. 73.
Kubasik told C4ISRNET the deal, expected to close in the first half of 2023, will drive competitiveness among the defense industrial base.
“We’re trying to become the sixth prime, to allow for more competition. I think for us, to continue to grow and be a player with the Department of Defense, we have to focus on organic growth and inorganic growth,” Kubasik said. “I believe this acquisition creates competition, and I think additional acquisitions will create more competition.” (Source: glstrade.com/Defense News)
03 Oct 22. Qnnect™ Acquires Connectronics. Qnnect™ (“Qnnect”) a portfolio company of Arcline Investment Management (“Arcline”) today announced the acquisition of Connectronics, Inc., an industry-leading designer and manufacturer of RF connectors. Qnnect now brings together Connectronics with Meritec, Joy Signal Technology, and Custom Interconnects.
Founded in 1985, Connectronics designs and manufactures high performance RF and Microwave connectors and adapters for the Aerospace, Telecom, Military, Test and Measurement and Medical applications. The company has a wide variety of coaxial connectors and adapters, including standard, custom, and ‘hard-to-find’ components ideally suited to meet its customers’ demanding technical specifications.
“I am excited to welcome the Connectronics team to the Qnnect family,” said Kevin Perhamus, CEO of Qnnect. “The company has established a very strong reputation for high-quality and highly reliable RF connectors. With more than 35 years of RF connector design and application experience, Connectronics is a perfect extension to Qnnect’s growing portfolio of interconnect products.”
Enrique Morales, CEO of Connectronics, added, “We are thrilled to be joining Qnnect and we look forward to working together to help our customers solve their most challenging connectivity needs.”
About Qnnect:
Qnnect (pronounced: “Connect”) is a leading global producer of highly engineered electronic interconnect solutions for high-density and high-speed applications of leading original equipment manufacturers. Qnnect’s connector and interconnect businesses have over 100 years of combined experience as trusted partners in the Defense & Aerospace, Hi-Rel, Semiconductor, Test & Measurement, and Consumer Electronics markets. For more information, visit www.qnnectnow.com.
About Arcline Investment Management
Arcline is a growth-oriented private equity firm with $4.4bn in cumulative capital commitments. Arcline seeks to invest in technology-driven, meaningful to the world industrial businesses that enable a better future. For more information visit www.arcline.com. (Source: PR Newswire)
03 Oct 22. Viasat to Sell Government-Systems Unit to L3Harris for Nearly $2bn. Market Watch reported today that satellite specialist Viasat Inc. on Monday said it is selling its military-communications business to defense contractor L3Harris Technologies Inc. for $1.96bn.
Viasat will use the expected $1.80bn net cash proceeds resulting from the agreement to reduce its leverage position and increase liquidity, the company said.
The Wall Street Journal on Sunday reported that a deal was imminent.
Viasat’s business, known as Link 16 Tactical Data Links, is part of the government-systems segment of the parent’s group. It also is an integrated network of military aircraft, surface vessels, ground vehicles and bases designed to securely share voice-and-data communications.
Link 16 Tactical Data Links generated revenue of around $400m of revenue in fiscal 2022, the company said.
Russia’s invasion of Ukraine has sharpened the focus of military leaders on cybersecurity as well as the need for more satellite-based communications and sensors to manage the battlefield, Pentagon officials have said in recent weeks. (Source: Market Watch)
03 Oct 22. Qinetiq buys and sells. Defence group Qinetiq (QQ.) is buying Australian company Air Affairs for AUS$53m (£31m) and selling a space business in Belgium for €32mn (£28m). The company said the deals align with its strategy of focusing on six different offerings within its three main markets of the US, UK and Australia, reinvesting the proceeds of non-core disposals. Air Affairs provides a number of services to the Australian Defence Force, including targets and training and aerial surveillance and reconnaissance. It employs about 180 people in New South Wales and in the 12 months to June made a cash profit of AUS$5mn on revenue of AUS$43mn. The Belgian space business, Qinetiq Space, is being sold to Redwire Space Europe. It designs commercial satellites systems for space missions and its main customer is the European Space Agency. The division generated a cash profit for Qinetiq’s Global Products business of €5mn (£4.4m) on revenue of €49mn in the year to March. (Source: Investors Chronicle)
30 Sep 22. CIRCOR Reports Financial Results for Second Quarter Ended July 3, 2022.
- GAAP EPS of $0.19 – Up 120% YoY; Adjusted EPS of $0.32 – Up 60% YoY
- GAAP Operating Income of $11.9m – Up 239% YoY; Adjusted Operating Income of $16.6m – Up 50% YoY
- Orders down (1%) reported and up 5% organically
- Progressing with review of strategic alternatives
- Q2 10-Q filed
CIRCOR International, Inc. (NYSE: CIR) (“CIRCOR” or “the Company”), one of the world’s leading providers of mission critical flow control products and services for the Industrial and Aerospace & Defense markets, today announced financial results for the second quarter ended July 3, 2022.
Q2 2022 Overview:
- Revenue of $191m up 2% reported and 8% organically compared to Q2’2021
o Aerospace & Defense revenue of $67m, up 11% reported and 14% organically
o Industrial revenue of $124m, down (2%) reported and up 5% organically
- Orders of $208m, down (1%) and up 5% organically
o Aerospace & Defense orders of $69m, up 27% and 32% organically
o Industrial orders of $139m, down (11%) and (4%) organically
- Backlog of $477m, up 9% driven by strong demand in Industrial
- GAAP operating income of $11.9m, up 239%
- GAAP operating margin of 6.2%, up 1080 bps
- Adjusted operating income $16.6m, up 50%
- Adjusted operating margin of 8.7%, up 280 bps
CIRCOR President and CEO, Tony Najjar said, “Our team executed well in Q2, navigating ongoing supply chain challenges, an inflationary environment, and labor shortages. Organic orders were up 5% for the quarter and our backlog heading into the second half of the year was a robust $477m, up 9% from prior year. Our revenues in the quarter were up 2% reported and 8% organically with solid margin expansion as a result of our simplification actions and value-based pricing initiatives.”
Mr. Najjar continued, “With today’s filing of our second-quarter 10-Q, we are very pleased to be up to date with our financial reporting. Our team has worked tirelessly to make this happen, while also making progress with our simplification and cost-out actions, and in our process to review strategic alternatives. We have been hard at work seeking to ensure that CIRCOR delivers sustained growth and margin expansion. We continue to build on our relationships with our customers, improving service levels and aftermarket product flow, while focusing on value-based pricing initiatives and leveraging 80/20 principles across the Company.” (Source: BUSINESS WIRE)
02 Oct 22. ECA acquires iXblue to create European defence robotics champion. The French Groupe Gorgé has acquired fellow French autonomy specialist iXblue. This purchase will bring underwater warfare specialist ECA Group and iXblue together to create a European high-tech industrial champion in the fields of robotics, maritime, navigation, aerospace and photonics. The two companies will benefit from a global workforce of 1,500 people and will achieve an annual turnover of €250 m ($383 m).
Together, iXblue and ECA Group will provide customers with a unique offer ranging from components to complex systems to support critical missions in severe environments, the companies said an a statement.
“In addition to our complementary activities, both our companies share a common DNA centered around innovation and entrepreneurship,” said Fabien Napolitano, President & CEO of iXblue. “This acquisition by Groupe Gorgé, that puts iXblue and ECA Group under the same roof, will enable us to create new synergies and strengthen our capacity to invest in research and development to offer solutions that are always at the cutting edge of technology.”
The announcement came only days after ECA Group and iXblue displayed a powerful force multiplier combination of autonomous robots for undersea warfare.
ECA Group’s A18D Autonomous Underwater Vehicle (AUV) and iXblue’s DriX Unmanned Surface Vehicle (USV) were deployed together in a demonstration to defence media at La Ciotat in southern France during the lead-up to next month’s Euronaval 22 Conference.
ECA Group’s SEA1905 Capture Leader Romain Dumont said the deep ocean was a new frontier often compared to outer space due to the difficulty in communication and navigation for undersea vehicles.
“Undersea warfare is receiving increased attention, especially seabed warfare with 95 per cent of the world’s information flow passing through more than 450 submarine data and communication cables lying on the ocean floor,” he said.
“Power cables, natural resource pipelines and extraction systems are other assets at risk. Cutting or destroying this infrastructure by an aggressor would have major impacts for countries. As such, there is a need to better understand the deep-sea environment, monitor it and intervene when necessary and therefore bring new technology or combine existing technologies.”
This was the aim of the demonstration conducted in the Mediterranean to show how the A18D working together with iXblue’s DriX USV can provide enhances undersea warfare capabilities in deep and ultra-deep waters.
The A18D is a 3000m-rated AUV that collects high quality underwater data through onboard systems, such as state-of-the-art interferometric SAS sonars. It is also equipped with advanced decision-making autonomy modules for a variety of roles. An Automatic Target Detection (ATD) module can automatically detect objects that can then be recovered or neutralised.
During the demonstration, the DriX surface vessel communicated with the A18D using the iXblue Gaps system providing crucial navigation update data for the A18D and relaying data transmissions to a shore-based command centre.
Positioning the DriX USV directly above the A18D AUV allowed high-bandwidth communications using SATCOM or 4G, with the DriX USV able to select the best communication mode depending on the environment, allowing faster data collection without having to wait for the AUV to surface.
While both vehicles are operationally proven and independently in operational service around the world, this demonstration was a first look at the unique and powerful capability provided by combining the systems.
Although the demonstration only included a single AUV, the DriX is capable of simultaneously working with multiple AUVs collaboratively to cover large areas. The DriX also has a much smaller visual and infrared signature and smaller radar cross section than a conventional mother ship, providing a stealthy and formidable capability for seabed warfare.
(Source: Rumour Control)
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TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.
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