PARIS — Satellite and rocket-component builder OHB SE fell short of its revenue target for 2015 because of delays in two telecommunications satellites for which it is prime contractor, the company said March 17.
Bremen, Germany-based OHB expects a slight rebound in 2016 on the assumption that one of the two satellites – the Hispasat 36W-1 for fleet operator Hispasat of Spain – is delivered in October. The other, the EDRS-C/Hylas-3 data-relay and Ka-band communications satellite, is scheduled for delivery in 2017.
OHB, with partner Surrey Satellite Technology Ltd. (SSTL) of Britain, is prime contractor or the European Commission’s Galileo positioning, navigation and timing satellites. Production has now assumed its steady state, with six more Galileo satellites to be delivered for launch this year.
The European Commission plans a competition for additional Galileo satellites this year and has said it would manage the competition so that OHB’s natural cost advantage does not effectively rule out the choice of a competing bidder.
The commission is leaving open the possibility of ordering four satellites from one contractor and four from another, or all eight from a single bidder. Because the satellites will be nearly identical in performance to the OHB-built spacecraft, the company has a leg up on the competition.
Commission officials have said they are weighing the cost advantage of having OHB produce more satellites from an existing production run, versus the long-term interest in guaranteeing a dual-source capability in Europe.
“OHB will try to convince the customer that the OHB-SSTL combination is able to assure the [satellites’] deployment by 2020 as required,” OHB said in a statement in response to SpaceNews inquiries. “The recurring design and teaming will guarantee minimum non-recurring effort and risks.”
OHB is one of three formally recognized European satellite prime contractors, the others being Airbus Defence and Space and Thales Alenia Space. As such, and also because its MT Aerospace division in Augsburg, Germany, builds Ariane rocket components, OHB has been in the middle of the debate over the reorganization of Europe’s rocket sector.
The company said it has been questioned by the European Commission with respect to the proposed purchase, by Airbus Safran Launchers, of the 35 percent stake in launch-service provider Arianespace now owned by the French space agency, CNES.
Industry officials have said OHB and Avio of Italy, which is prime contractor for Europe’s Vega small-satellite launcher, have been discussing a possible teaming to consolidate their minority interests in Arianespace to better defend their interests against Airbus Safran dominance.
Whether OHB is preparing to bid for all or part of the 85 percent of Colleferro, Italy-based Avio, long available for sale by its owner, private-equity investor Cinven, is unclear. The companies have declined to address the issue publicly. Recently the Italian Space Agency clearly said it does not want Airbus Safran Launchers to purchase a majority stake in Avio.
“CNES is perfectly allowed to sell its shares, as is any shareholder,” OHB said in its response. “The change of control has obviously raised some concerns” at the European Commission, which has opened an in-depth inquiry into the Airbus Safran purchase. “OHB is being interrogated [by the commission] as are many other companies, and is answering the numerous questions.”
OHB’s involvement in the commission’s inquiry is two-fold. As a satellite prime contractor, it wants to insure that an Airbus Safran-dominated Arianespace does not discriminate in favor of Airbus-built satellites when assembling the Arianespace launch manifest.
As a builder of Ariane and Vega components, OHB is also concerned about protecting its rights in an Arianespace that, after the share sale, will have 75 percent of Arianespace.
“Minority shareholders’ protection is an issue which is currently discussed among Arianespace shareholders, in order to have the right level of protection in the new scheme,” the company said. “There are obviously some synergies to develop between MT Aerospace and Avio.”
European governments have agreed that the production of Vega’s solid-fueled first stage – which is the same structure used for the future Ariane 6 rocket’s strap-on boosters – ultimately will be manufactured both at Avio and at MT Aerospace.
OHB’s SmallGEO satellite design, financed by the German and European space agencies, is OHB’s pitch to join Airbus and Thales Alenia Space in the geostationary satellite market. Hispasat 36W-1, formerly called Hispasat AG1, is the inaugural SmallGEO and is far behind its initial launch schedule.
OHB said the satellite has completed its mechanical testing and is currently undergoing thermal-vacuum chamber tests, with delivery scheduled for October.
The second SmallGEO satellite is the EDRC-C/Hylas 3 satellite being built under a European Space Agency program called European Data Relay Service, which is managed by Airbus. The prime EDRS mission is to relay, via laser terminals, Earth observation data from low-orbiting Earth observation satellites to telecommunications satellites in geostationary orbit, which would then transmit the data to ground users.
EDRS-C also carries a commercial Ka-band telecommunications payload, called Hylas-3, for Avanti Communications Group of London. The satellite is scheduled for launch in 2017.
A third SmallGEO mission, called Heinrich Hertz, is a German government civil/military telecommunications satellite that has struggled to secure full funding.
OHB said the project has been delayed again because competitor Airbus protested the government’s plans to award a direct contract to OHB.
“A formal competitive process was started, including competitive bids for the ground segment and payload,” OHB said of Heinrich Hertz. “The formal decision and confirmation process will take until year-end 2016, for a formal start in early 2017.”
For the year ending Dec. 31, OHB reported revenue of 730 million euros ($798 million), flat from the previous year after factoring in the sell-off of an OHB division. The company had forecast 800 million euros.
But pro forma profit, before interest and taxes, was 40.2 million euros, up nearly 19 percent over 2014. The company said 2016 revenue is expected to be 750 million euros, with pretax profit of 42 million euros.
