OHB Revenue, Profits Soar on Galileo Work

by





PONTE VEDRA, Fla – German space hardware manufacturer OHB Technology on Aug. 11 reported a 42 percent increase in revenue and a 55 percent increase in backlog for the first six months of 2010 as its work on Europe’s Galileo satellite navigation constellation began to ripple through the company’s accounts.

OHB is prime contractor for 14 Galileo satellites, with the first due in time for launch in late 2012.

Bremen-based OHB said its financial results do not yet include any work on Europe’s next-generation Meteosat weather satellites, on which it has won a large role with Thales Alenia Space of France after months of German government pressure to give the award to Astrium Satellites of Friedrichshafen, Germany.

Cannes, France-based Thales Alenia Space will be prime contractor for the system, called Meteosat Third Generation (MTG), with OHB as principal subcontractor, after the German Transportation Ministry agreed to drop its demand that Germany have the lead role in the project. But the final MTG contract, expected to be signed this autumn, features more work for Astrium of Germany than had been foreseen in the original Thales-OHB bid.

In an Aug. 11 conference call with investors, OHB Chief Executive Marco R. Fuchs said he has no problem with the way the MTG contract award has evolved, even though it means somewhat less work for OHB, and more for Astrium.

“Yes, we do share with Astrium, and yes, without Astrium our share would have … been more. But this is not a negative. Without Astrium we would have been under pressure to build up our resources even more than we are doing. There are clearly more subcontractors, but the bottom line is I am very happy that Astrium is on our team.”

OHB is already adding staff to accommodate the Galileo work, Fuchs said. The buildup for MTG now will be less substantial than if Astrium had not been granted the extra work.

Fuchs said the MTG contract configuration now means more work for German companies than was the case before the German government protest. To that extent, he said, the protest was at least partly successful.

The MTG contract that Thales Alenia Space and OHB are expected to sign with European governments this autumn is valued at 1.25 billion euros ($1.63 billion). OHB’s share is expected to be some 700 million euros, of which about 300 million euros will stay within the company’s OHB System and Kayser-Threde divisions. The rest will go to outside contractors, including Astrium.

OHB in July purchased Thales Alenia Space’s Antwerp, Belgium, facility for an undisclosed price. Fuchs said he is confident of being able to turn around the trimmed-down facility, which has not been profitable under Thales Alenia Space. OHB’s goal with a new management of the facility will be to take maximum advantage of the European Space Agency’s geographic-return policy, wherein contracts are given to each nation’s industry according to that nation’s participation in a given ESA program.

Belgium
is ESA’s fifth-largest contributor. Fuchs said Thales Alenia Space had guaranteed to continue to contract work to the Antwerp facility, which specializes in ground systems for Earth observation and telecommunications satellites, under OHB ownership.

“Thales Alenia Space obviously had problems with the company in the recent past,” Fuchs said. With the company’s restructuring already begun, and a new management team set to arrive, OHB expects the Antwerp operation to be profitable and to stimulate further OHB work for Belgium’s ESA and national space programs.

OHB Technology reported revenue of 193 million euros for the six months ending June 30, a 42 percent increase over the same period a year ago. Backlog, swollen by the Galileo contract signed in January, stood at 1.3 billion euros as of June 30, a 55 percent increase.

Fuchs said OHB’s Space Transportation division, with MT Aerospace as the principal component, faces challenges this year and may not reach profit and revenue levels expected earlier. He said several factors were to blame, including the fact that Europe’s Ariane 5 rocket, for which MT Aerospace makes numerous components, is not operating as profitably as hoped this year.