27 Mar 03. Finmeccanica SpA said on Thursday that it had net consolidated profit of €203m in 2002, 8% more than the €188m reported for 2001. Finmeccanica’s net profit handily beat the EUR175 million forecast by three analysts.

The improvement reflected a EUR26 million larger contribution to Finmeccanica’s bottom line from its 18.3% stake in Italo-French chipmaker ST Microlectronics NV.

The company, 32.4% owned by the Italian government, said it would pay a dividend of one euro cent per share, the same as the year before. Earnings before interest, taxes, depreciation and amortization rose 9% to €698m. Finmeccanica said in a statement that its consolidated sales rose 15% to €7.6bn. The company said it has €21.7bn in pending orders, enough to assure three years of work and almost 10% more than at the end of 2001. Finmeccanica said it ended 2002 with net debt of €249m, due to debt taken on to finance acquisitions in the aerospace and telecom sectors.

The company said it expected to boost its industrial revenues in 2003 despite what it called difficult market conditions. Profitability should remain at the same level as during 2002, the company said.

Finmeccanica said its earnings before interest, taxes, depreciation and amortization were 6.6% of revenue, up from 6.5% in 2001.

The company made no reference to Fiat SpA’s (FIA) avionics unit, Fiat Avio, which the Italian government is pressuring Finmeccanica to buy, according to Italian newspapers. But it did say it was in the process of
evaluating unidentified “strategic initiatives” that could require it to take out further debt. Such initiatives would, the company said, “further consolidate Finmeccanica’s presence on an international level and grow its ability to achieve profit and create value for shareholders.”

Comment: Finmeccanica is rapidly emerging as one of the strongest European defence contractors with little debt and a good order book. The company will benefit from its EUROSYSTEMS JV with BAE SYSTEMS and further deals with Boeing should not be ruled out.