OHB Sees Solid Growth Despite Struggling Subsidiaries

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PARIS — Satellite and rocket-component builder OHB AG of Germany on Aug. 10 reiterated its forecast that revenue in 2011 would grow by 30 percent over 2010 on the strength of its Galileo satellite navigation and other space system contracts despite sluggish results from its MT Aerospace and Aerotech Peissenberg divisions.

The company said the difficulties at MT Aerospace, which is 70 percent owned by OHB, are due largely to uncertainties surrounding the planned delivery of 25 large astronomy antennas for a ground-based telescope in Chile, the international ALMA, or Atacama Large Millimeter/Submillimeter Array, project.

MT Aerospace’s MT Mechatronics division is in charge of assembling the European antennas for ALMA, but the contract has encountered numerous delays. OHB Chief Executive Marco R. Fuchs said he remains uncertain about how quickly work will proceed. “We’re still not out of the woods,” Fuchs said in a conference call with investors, adding that the first OHB-provided ALMA antenna has been installed at the site of the Chilean observatory, 5,000 meters above sea level.

OHB Finance Director Kurt Melching said during the call that MT Aerospace has also faced contract delays related to Europe’s ATV unmanned space station resupply vehicle, which contributed to a less-than-forecast performance in the first half of 2011.

OHB purchased aero-engine component manufacturer Aerotech Peissenberg in February and subsequently changed its management. Fuchs said integrating the facility into OHB has taken longer than expected, and that its revenue in 2011, which had been forecast at 60 million euros ($87 million), likely will end up slightly lower than that.

“Changing management is a sign that you are not completely happy with performance,” Fuchs said of the replacement of Aerotech Peissenberg executives. “We will give time to the new team. I strongly believe in the aero-engine industry. It’s a strong segment, although I did expect it to happen a bit quicker.”

The reduced revenue from MT Aerospace and the Peissenberg operation has a blunted effect on OHB’s total financial picture because both are only 70 percent owned by OHB.

The 100 percent-owned businesses, in contrast, are doing as well as expected, enabling the company to maintain previous forecasts that revenue would exceed 600 million euros in 2011, which would be a 30 percent increase over 2010.

Fuchs said diversifying the business into aero-engines and other areas remains a long-term OHB strategy to enable it to better withstand the down cycles in any business, such as satellite manufacturing.

OHB also recently purchased the satellite division of SSC of Sweden. With the purchase came a 50-person team that will stay in Sweden, giving OHB a slice of future revenue from Swedish space budgets as a part of a national program or, more likely, as part of the Swedish contribution to the 19-nation European Space Agency.

Fuchs said the new company, OHB Sweden, has developed an expertise in formation flying of small satellites with the Swedish Prisma mission, which features a target and a chaser satellite. The German Aerospace Center, DLR, has leased Prisma from the Swedish government, saying formation flying techniques have numerous applications in Earth observation and science.

OHB Sweden also provides the attitude control system for OHB’s Small-Geo satellite bus, designed with European Space Agency and DLR investment to give OHB access to the commercial satellite telecommunications market.

For the six months ending June 30, OHB reported revenue of 238 million euros, up 24 percent from the same period a year ago. The figures do not include OHB Sweden as the acquisition was made too late to have an impact.

Also not included were revenues from the six-satellite Meteosat Third Generation meteorological system being built for ESA and Europe’s Eumetsat meteorological satellite organization. OHB is building the satellite platforms, with Thales Alenia Space of France serving as system prime contractor. Revenue from this project will not begin to flow until later this year.

 

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