OHB’s Sales Rise on Galileo and Weather Satellite Work

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LONDON — German satellite and rocket-component manufacturer OHB Technology on Nov. 9 reported 50 percent increases in revenue and backlog on the strength of its contract to build 14 of Europe’s Galileo navigation satellites, and said its expected work on a European meteorological satellite program has increased to well over 300 million euros ($420 million).

In a conference call with investors, Bremen-based OHB said it expects the Meteosat Third Generation (MTG) project to begin, in a formal contract sense, late this month. The contract, with the 18-nation European Space Agency and Europe’s Eumetsat meteorological satellite organization, calls for the construction of six satellites in total.

OHB Chief Executive Marco R. Fuchs said that following protests of the original MTG contract by the German Transport Ministry, the German work share in MTG has been increased both for OHB and for Astrium of Germany, which had bid to be MTG’s prime contractor.

Thales Alenia Space of France remains MTG prime contractor, but Fuchs said the German share of the program has grown larger as the contract details were negotiated. OHB’s estimate that its slice of MTG would be about 300 million euros over six years now looks overly conservative, he said.

OHB is building 14 Galileo navigation satellites under a 566 million euro contract signed in January with the European Commission. OHB is prime contractor for the work, but around 230 million euros of the contract’s value is expected to go to Surrey Satellite Technology Ltd. of Great Britain, which is building the satellites’ electronics payloads.

While the net amount of revenue staying at OHB will be substantially greater for MTG than for Galileo, the Galileo revenue arrives over a three-year period.

As it moves through OHB’s books, the Galileo work results in unusually high revenue figures, even if much of the revenue ultimately passes to the British company and other subcontractors and does not make it to OHB’s bottom line.

For the nine months ending Sept. 30, OHB reported revenue of 319.5 million euros, up 52 percent over the same period in 2009. Pretax profit, at 14.1 million euros, was up 5 percent from a year earlier. Backlog at Sept. 30 stood at 1.2 billion euros, up 55 percent from a year ago — again because of the Galileo effect.

OHB and Astrium will be competing to build the remaining satellites in the first-generation Galileo system once the European Commission determines how to fund the work. The Galileo constellation was originally planned to feature 30 satellites, but only 18 have been contracted, and only 14 of these have been booked for launch, because of a funding shortfall.

Fuchs said the debate about Galileo’s future status has had no effect on the company’s work.

OHB’s MT Aerospace division, which builds components for Europe’s Ariane 5 rocket, reported lower revenue and profit as the company booked a one-time charge of about 4 million euros to adjust for indexed pricing of certain raw materials used in Ariane production.

OHB Finance Director Kurt Melching said this is not likely to be a recurring problem, and that MT Aerospace’s results should improve in the fourth quarter and in 2011.

The German government is pushing the European Space Agency to approve construction of a new, restartable upper stage for the current Ariane 5 vehicle as part of a program called Ariane 5 Mid-life Evolution. If approved by European governments, the new stage would increase Germany’s share in the Ariane 5 program from some 20 percent to up to 33 percent. That increased role would automatically result in increased work for MT Aerospace and for other German companies.