A Growing Astrium Shakes Off Loss of Galileo Order

by

PARIS — Europe’s Astrium space hardware and services provider on Jan. 19 reported an 11 percent increase in revenue in 2009 and a 31 percent increase in new orders led by a large contract to provide Ariane 5 heavy-lift rockets and a four-satellite order for commercial telecommunications satellites.

Astrium, which is a subsidiary of Europe’s EADS aerospace conglomerate, is the Ariane 5 prime contractor and is also prime contractor for France’s M51 strategic missile, which passed a series of flight tests in 2009.

Presenting the company’s 2009 financial results in a press conference here, Astrium Chief Executive Francois Auque sought to minimize what he referred to as perhaps the only blemish on an otherwise success-filled year: Astrium’s loss, to competitor OHB Technology of Germany, of an order to build the first 14 fully operational Galileo navigation satellites for the European Commission.

Auque said the 14-satellite order would have brought no more than 100 million euros ($144 million) to Astrium per year over three years — not much for a company that in 2009 reported revenue of 4.8 billion euros.

And for Astrium, the Galileo competition was not a total loss: Small-satellite builder Surrey Satellite Technology Ltd. (SSTL) of Britain, which Astrium purchased in 2009, is a major subcontractor to OHB for the Galileo contract and is expected to get about 40 percent of the overall contract value.

“The Galileo contract was a disappointment, but let’s put it into perspective,” Auque said, noting that Astrium won an order valued at 523 million euros to build four commercial telecommunications satellites for SES of Luxembourg. The four satellites will be delivered at six-month intervals starting in 2012.

At 4.8 billion euros, Astrium’s revenue increased 11 percent over 2008, which was a 21 percent increase over 2007. The Astrium Services division has been growing quickly on the strength of its long-term contract to provide telecommunications services to the British Defence Ministry and other governments, and with Astrium Services’ Spot Infoterra Earth observation division, which commercializes data from French optical and German radar civil satellites.

Astrium Services accounted for 38 percent of Astrium’s revenue for the first nine months of 2009. Auque declined to break out full-year revenue between Astrium Services, Astrium Space Transportation and Astrium Satellites. He also declined to disclose Astrium’s pretax profit margin, which was 4.8 percent of revenue for the first nine months of 2009.

He said that given the continued weakness of the U.S. dollar relative to the euro, it would be “extremely difficult” for the company to reach EADS management’s target of a 6 percent pretax profit margin. The revenue target for 2010, he said, was to equal 2009’s total.

In addition to the four-satellite order from SES, Astrium in 2009 signed a contract valued at slightly more than 4 billion euros to build 35 Ariane 5 heavy-lift rockets for Europe’s Arianespace launch consortium, in which Astrium is a major shareholder.

Astrium reported that it booked 8.2 billion euros in new orders in 2009, more than double the new business booked in 2008. As of Dec. 31, the company’s backlog stood at 14.4 billion euros.

Auque reiterated Astrium’s determination to build successors to the current Spot 5 medium-resolution optical Earth observation satellite, which has already passed its design life, despite the lack of financing so far from the French government. The French space agency, CNES, has paid for previous Spot satellites and is also financing construction of two higher-resolution satellites, called Pleiades, scheduled for launch in 2010 and 2011.

Astrium officials said construction of a Spot 6 and Spot 7 satellite, to be launched in 2012 and 2013, is expected to cost about 150 million euros per satellite.

“We are taking on a very significant risk” in committing to the program without government help, Auque said.

Spot Image, based in Toulouse, France, reported 109 million euros in revenue in 2008 and said its pretax profit margin surpassed 20 percent. Spot 5, launched in May 2002 with a contracted five-year service life, is the company’s biggest source of revenue. Astrium, through its Astrium Services division, owns 82 percent of Spot Image.