In Switch, Astrium’s Hardware Business Outshines Services

by

PARIS — Europe’s EADS aerospace company on May 14 said double-digit increases in revenue in its Astrium Satellites and Space Transportation divisions overcame a sharp drop in revenue in the once high-flying Astrium Services business.

Total Astrium revenue for the three months ending March 31 was 1.369 billion euros ($1.78 billion), up 3 percent from the same period a year ago. Earnings before interest and taxes was 4.8 percent of revenue, down from 4.9 percent a year ago, reflecting the generally lower margins in the hardware businesses compared with the services sector.

Astrium’s backlog at March 31 stood at 12.1 billion euros, down from 12.7 billion euros as of Dec. 31.

Astrium Space Transportation, which builds Ariane 5 heavy-lift launch vehicles, European space station hardware and France’s strategic missiles, reported a 10 percent increase in revenue, to 609.5 million euros, for the three months ending March 31. The Ariane 5 vehicle notched its 54th consecutive success during the quarter and is scheduled to launch five more times in 2013.

Astrium Satellites reported revenue of 383.3 million euros, up 11.3 percent from a year ago.

Astrium Services, which until recently was Astrium’s growth engine, reported revenue of 314.9 million euros, down 15 percent from a year ago.

EADS Chief Financial Officer Harald Wilhelm said in a May 14 conference call with investors that the services business’ “presence in certain markets is more difficult.” 

He did not detail what Astrium Services businesses were feeling the pressure. Among other things, the division provides military X-band communications to the British government and other allied governments through the company’s groundbreaking Skynet 5 contract, which runs to 2022, with the British Defence Ministry.

The latest of the Skynet 5 satellites, Skynet 5D, entered service in April. Astrium Services also owns an X-band payload that was recently launched aboard commercial fleet operator Telesat’s Anik G1 satellite.

In addition to selling satellite bandwidth to government and military customers, Astrium Services markets optical and radar Earth observation imagery worldwide through the French Spot and German TerraSAR-X and TanDEM-X satellites. 

Spot 6, financed entirely by Astrium Services, began operations earlier this year, as did the Pleiades 1B high-resolution optical satellite, which joined its twin, Pleiades 1A. The two Pleiades spacecraft were financed by the French government, with French defense forces allotted a portion of Pleiades imagery. 

Astrium Services markets the rest of the Pleiades capacity, going head-to-head with DigitalGlobe of the United States in the growing market for high-resolution optical geospatial imagery. The Spot 6 and future Spot 7 optical satellites will preserve Astrium Services’ position in the medium-resolution market, which Astrium and the French government have maintained through the Spot satellite series for more than 25 years.

Astrium Services and the German government are in discussions about how to proceed with a next-generation commercial radar capacity to succeed TerraSAR-X.