Bloomberg News

Finmeccanica Predicts Return to Profit After Writedowns in 2011

March 27, 2012

Finmeccanica SpA (FNC), Italy’s biggest defense company, forecast a return to profit this year after reporting a record loss for 2011 because of writedowns.

The manufacturer swung to a net loss of 2.35 billion euros ($3.13 billion) last year after a 493 million-euro profit a year earlier, it said in a statement distributed by the Italian exchange today. The company won’t pay a dividend for 2011.

Finmeccanica posted an adjusted loss before interest, taxes, amortization and restructuring of 216 million euros in 2011. That compares with a median analyst estimate of a 237 million-euro loss in a Bloomberg survey. The Rome-based company forecast 2012 adjusted Ebita of about 1.1 billion euros.

The state-controlled contractor said it booked writedowns and one-time charges of 3.2 billion euros in 2011, including writedowns tied to a components contract for Boeing Co. (BA)’s 787 airliner and “changing business outlook” at its DRS Technologies Inc. unit in the U.S. amid cuts in the U.S. defense budget. Analysts had estimated a net loss of 2.13 billion euros, based on the average of 10 estimates.

Chief Executive Officer Giuseppe Orsi took over as chairman on Dec. 1 after Pier Francesco Guarguaglini stepped down amid a corruption probe involving company executives.

Orsi, who is undertaking Finmeccanica’s biggest overhaul in at least a decade, is targeting asset sales of 1 billion euros this year to focus on military businesses and profitable aeronautics contracts. The company is reviewing its transport units and is in talks for a partnership for the AnsaldoBreda trainmaker.

Finmeccanica rose 11 percent today to 3.85 euros after Il Sole 24 Ore reported that Hitachi Ltd (6501) is in advanced talks to buy 50 percent of AnsaldoBreda and 29 percent of Ansaldo STS SpA (STS), the signaling unit. Orsi said at a press conference today in Rome that the goal is to sell AnsaldoBreda this year. General Manager

To contact the reporter on this story: Marco Bertacche in Milan at mbertacche@bloomberg.net

To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net; Jerrold Colten at jcolten@bloomberg.net


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