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ESTABLISHING A EUROPEAN CHAMPION

ESTABLISHING A EUROPEAN CHAMPION
BATTLESPACE Editor Julian Nettlefold talks to Dr Stefan Zoller, CEO, EADS Defence & Security Systems Division.

Before Farnborough Air Show, Battlespace talked to Dr. Stefan Zoller about growth perspectives in the Defence sector of EADS.

“What is your assessment of the current figures EADS is providing in general and in defence particularly?” the Editor asked.

“The figures show that EADS is operating successfully in all areas. The strength of the forward order book alone is enough in itself to provide significant organic growth without the requirement for large and strategic acquisitions. My own segment results and growth prove the goals and growth forecasts made when we established this Division some three years ago,” Zoller replied.

Revenues of the Defence & Security Systems Division in the first quarter had increased by eight percent to €1,000m (Q1 2005: € 925m). First-quarter EBIT strongly improved compared to the same period of the previous year and reached € 35m (Q1 2005: € -35m). This increase resulted from the improved operational performance mainly in the ramp-up of the Eurofighter and missile businesses as well as from the capital gain of the sale of EADS/LFK to MBDA. It was partly offset by higher restructuring at the Business Unit Defence and Communications Systems compared to the first quarter of 2005.

”The order intake was in large part driven by successes in defence and communications businesses,” Zoller said. “EADS signed a contract to deliver the infrastructure for the Hungarian nationwide Tetra radio network which will be ready for roll-out by the end of January 2007. The Division’s order book amounted to € 18.5 billion as of the end of 2005, The acquisition of Atlas and Nokia will increase our ability to offer systems and solutions to our traditional customer base and civil institutions in all segments of defence and security business.”

Battlespace: “What are your major current projects?

”In the German tender for a digital voice and data transmission network for security authorities and organisations, EADS has submitted the most cost-effective bid. In the maritime electronics arena, EADS has been chosen to supply the command & control and weapons deployment system for the German F125 frigate. On air platforms, the Eurofighter Typhoon’s export potential was further boosted by submitting a tailored offer to the Norwegian government. Finally, the integration of EADS/LFK into MBDA was successfully completed on 1 March 2006. This marks a further step in the consolidation of the European missile industry.”

Battlespace: “These results certainly reflect your desire to continue to grow the EADS Defence & Security business into a significant player in world markets. Given the perceived reluctance by Thales and Finmeccanica, in particular, to embrace consolidation, how do you foresee growth at EADS Defence & Security Systems?”

“My overall opinion with regard to Europe and the future business model of the defence industry is that further consolidation is a must; how this is achieved is another matter. European nations see the need for national champions and they are entitled to that point of view. However, merging companies is not the only way to achieve consolidation,” Zoller continued. “Synergising national capability into European capability, such as the Dutch decision to drop its maritime surveillance capability and the establishment of joint cross- border programmes, is another way of achieving this consolidation.”

Battlespace: “Have there been many internal changes at EADS to achieve the growth stated by these figures?”

“First of all, backlog of our order book provides some short term secure growth. To provide long term profitability and growth we have to create efficiencies. To enable this we have been restructuring our Division, moving sites and rationalising our business. We are in the middle of this plan, and we’re already seeing the fruits of

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