OHB narrowly misses 2016 revenue goals, holds bar higher for 2017

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WASHINGTON — German satellite manufacturer OHB Systems just barely missed its 2016 revenue goal despite supply chain issues that slowed key programs.

For the full year 2016, OHB reported revenues of 728 million euro ($786 million), just shy of parity with last year’s 730 million ($788.1 million). OHB’s revenue target for 2016 was 750 million euros ($809.7 million), what would have been an increase of about 20 million euros year over year.

The near-miss hasn’t stopped the company from reiterating an even more ambitious growth target for this year. In February, OHB said it was targeting 800 million euros, or $863.7 million, for 2017, as well as an earnings before interest and taxes of 44 million euros ($47.5 million). In the company’s audited results for 2016, released March 21, OHB held to this target even though it didn’t see the revenue growth it was hoping for last year.

One of the big programs OHB is anticipating a near-term decision on is Heinrich Hertz, an experimental Ka- and Ku-and satellite for the German Aerospace Center that the German military also plans to use. OHB said in November last year it anticipates the Heinrich Hertz contract will be worth roughly 300 million euros ($330 million).

In a presentation accompanying its results, OHB mentioned three other potential new revenue streams: the third generation of Galileo navigation satellites, ExoMars 2020 and more Ariane 6 development work.

OHB is the prime contractor for 22 of the European Commission and European Space Agency’s Full Operational Capability (FOC) Galileo satellites; Surrey Satellite Technology Limited (SSTL), an Airbus subsidiary, provides the navigation payloads. OHB said the next order for FOC satellites “is still expected soon,” though the company submitted its proposal last summer.

Since then, ESA found 10 failures of the atomic clocks used for precise measurement of time onboard already-launched Galileo satellites. None of the 18 orbiting satellites — including the four in-orbit validation models produced by Airbus Defence and Space — were completely disabled, because each carries four clocks. But the alarming failure rate did cause ESA to question the launch rate of future satellites. Spectratime, a Swiss manufacturer of clocks for global navigation satellite systems, made the clocks for Galileo. OHB said ESA and the European Commission have ordered corrective measures on the eight remaining Galileo satellites the company is building.

OHB said it expects an order soon on ExoMars 2020, for which the company is a hardware contributor. European governments committed 337 million euros ($363.8 million) to ExoMars 2020 at the ESA ministerial conference this past December, of which 29 million euros ($31.3 million) came from Germany.

Germany also has 23 percent of the Ariane 6 development program. OHB said its subsidiary MT Aerospace has roughly 11.5 percent of the workshare of the next generation European rocket.

OHB’s backlog for 2016 shrank by 124 million euros ($133.9 million) to 1.56 billion euros  ($1.67 billion) total. Earnings before interest and taxes grew by 6 percent to 42.7 million euros  ($46.1 million), and operating cash flow jumped from 3.6 million euros  ($3.9 million) to 72.7 million ($78.5 million).

OHB also started a venture fund called OHB Venture Capital in 2016 focused on early phase companies with space-related technologies and services. The venture fund made its first investment March 15 in a startup called astrofactum, a Munich-based company formed in 2014 focused on astronomy and commercial observations of the universe.