OHB says coronavirus may delay satellite projects but won’t cost revenue
WASHINGTON — The slow-moving nature of spacecraft manufacturing will insulate OHB Systems, at least temporarily, from the effects of the coronavirus pandemic, according to a company executive.
OHB CEO Marco Fuchs said the company is standing by its forecast of generating 1.1 billion euros ($1.2 billion) in revenue this year, even though that projection was made five weeks ago, before the COVID-19 virus had become a global outbreak.
The Bremen, Germany-based company builds spacecraft mainly for government customers, including the European Space Agency and the European Commission, on multiyear timelines the company expects are too long to see major revenue losses, Fuchs said.
“The major difference from the space industry to many other industries is we are not at risk with regards to revenues,” Fuchs said during a March 18 earnings call. “There might be delays but it’s not a cancellation. The demand is not changing.”
OHB builds Europe’s Galileo navigation satellites, and is competing for participation in several Copernicus environmental-monitoring program satellites.
The immediate risk to OHB from the coronavirus is delays with completing spacecraft and getting them launched, Fuchs said.
For example, the ESAIL ship-tracking satellite that OHB’s Luxembourg-based subsidiary LuxSpace built is stuck on the ground now that French authorities suspended launch activity at Europe’s French Guiana spaceport as part of a broader effort to curb the outbreak. That satellite is awaiting a launch on an Arianespace Vega rocket.
But the majority of OHB’s nearly 3,000 employees can work remotely on engineering tasks and other assignments, Fuchs said, keeping the company active.
“The percentage of people that really stand in the integration facilities working on satellites is minor, very minor,” Fuchs said.
OHB may start to accumulate production delays if the coronavirus pandemic extends into the summer, Fuchs said.
Government customers are more forgiving of such delays, Fuchs said, and may even provide financial support to companies hurting financially as countries promote social distancing and other efforts to mitigate the coronavirus spread.
“Our stuff sits here for months before we install it sometimes, so we have a very different risk assessment on the optimization of balance sheets and risks, and current assets,” Fuchs said. “We are not working on stuff in a daily production [mode] but on a year, multi-year project mode.”
Fuchs said OHB could face some financial penalties if programs are delayed to the point that they miss milestones. But the company could receive forgiveness for those delays, especially if they are related to slips that are beyond its control, such as tests that must be conducted at ESA facilities impacted by coronavirus countermeasures.
OHB reported 1.03 billion euros in 2019 revenue, a 30-million euro increase from the year prior, and earnings before interest, taxes, depreciation and amortization, of 78.3 million euros, up from 2018’s 65 million euros.
Fuchs said OHB expects to win roughly 2 billion euros in new business in 2020.