OHB reports flat H1 revenue but still forecasts record year-end performance
HALIFAX, Nova Scotia – Satellite and rocket-component builder OHB SE of Germany on Aug. 17 reported flat revenue but higher profit for the six months ending June 30 and reiterated its full-year revenue forecast based on expected sales volume late in the year.
Bremen-based OHB, which is prime contractor for 22 European Galileo positioning, navigation and timing satellites, said its recently created OHB Venture Capital GmbH will give the company a window on new space technologies and services and provide an on-ramp for future tuck-in acquisitions.
OHB and ‘New Space’
“Everyone is talking about ‘new space’ and OHB will be positioned to be at the vanguard here,” the company said in a financial statement to shareholders.
OHB is also strengthening its position in the growing machine-to-machine (M2M) and Internet-of-Things (IoT) markets, in particular through its equity stake in U.S.-based Orbcomm, whose satellite fleet is directed at these markets.
OHB has created an Austria-based subsidiary, M2M Europe Network & Solutions GmbH, to develop Orbcomm’s business in Europe. With its subsidiary, LuxSpace, OHB is also under contract to the 22-nation European Space Agency (ESA) to build M2M/IoT subscriber terminals that attach to cargo containers to provide cargo position and health data to owners.
Strengthening the Orbcomm link
The OHB-Orbcomm link was demonstrated with the recent win, by a LuxSpace-Orbcomm grouping, of a four-year contract to provide Automatic Identification System (AIS) data on ship location and heading to the European Maritime Safety Agency.
The contract is valued at up to 10.2 million euros ($11.3 million) over four years, with LuxSpace and Orbcomm dividing the revenue about evenly.
OHB is one of Europe’s three major satellite prime contractors for European government business, the other two being Thales Alenia Space of France and Italy, and Airbus Defence and Space, with major installations in France, Germany, Britain and Spain.
All three have established multi-nation operations to position themselves for European government work, both from national governments and ESA, which distributes contract awards based on each nation’s contribution level to ESA.
In addition to LuxSpace, OHB owns CGS of Milan, Italy, which recently won a contract to build microwave-imaging instruments for three European Metop polar-orbiting meteorological satellites. The contract is valued at 166 million euros.
Another OHB subsidiary, Antwerp Space of Belgium, has won a contract valued at 18 million euros to provide part of the communications payload for ESA’s Juice scientific satellite, to be launched in 2022 to Jupiter.
The coming Galileo competition
OHB and Surrey Satellite Technology Ltd. (SSTL) of Britain, are maintaining their partnership in the Galileo project by bidding together for the next tranche of Galileo satellites. The European Commission and ESA are expected to award a contract for up to eight more satellites, with up to six options, late this year.
The commission, which owns the Galileo system, is under strong budget pressure to complete the Galileo constellation of 30 satellites by 2020 and to begin initial service by the end of this year.
Ordering recurrent-model satellites from the OHB-SSTL team likely would be the least-costly alternative, depending on how competitors Thales Alenia Space and Airbus position their bids.
But remaining with OHB-SSTL for this next batch could deprive Europe of the flexibility in contractor choice that the U.S. Defense Department has maintained for the GPS system by alternating contracts between Lockheed Martin and Boeing.
Revenue flat, profit up
For the six months ending June 30, OHB reported 316.4 million euros in revenue, about flat from the same period a year ago. But the company said it expected its backlog of 1.65 billion euros as of June 30 – flat from Dec. 31 – to move to revenue sufficient work to maintain its full-year revenue target of 750 million euros.
For the six months ending June 30, pretax income was up 12 percent, to 18.3 million euros, or 5.8 percent of revenue, compared to 5.2 percent a year ago.
Net profit was 10.5 million euros, up 5 percent from a year ago, OHB said.