PARIS – Satellite and rocket manufacturer Orbital ATK on Aug. 10 said global commercial satellite demand is weaker than the company had expected and would be a drag on its financial results in both 2016 and 2017.

Orbital Chief Executive David W. Thompson said the company recently booked its first commercial telecommunications satellite order for the year and likely would book just one more in the autumn, with another two likely in 2017. That is less than the three-per-year average that had buttressed Dulles, Virginia-based Orbital’s previous market assessments.

One industry official said the sole award so far in 2016 was with satellite fleet operator Eutelsat of Paris for the 5 West B satellite, and that Orbital is sharing the contract with Airbus Defence and Space of Europe.

The shortfall in expected commercial satellite orders forced Orbital to reduce its previously estimated free cash flow by $25 million for 2016 and again in 2017.

Commercial satellite business seen as sluggish through 2017

“The historically cyclical commercial satellite business is clearly in the down phase of a cycle,” Thompson said in a conference call with investors. “This is the result of pressure that many of the operators are feeling on their capacity pricing, compounded by new additions to their capacity emerging from the production pipeline now.”

Thompson’s remarks are not entirely consistent with the market view of MDA Corp. of Canada, the only other publicly traded company for which commercial satellites are a key revenue line. MDA said before the Orbital win that nine satellites had been ordered so far this year and that bidding activity remained strong. The two different perceptions may be due to the fact that MDA’s Space Systems Loral satellite manufacturing business is focused on larger telecommunications satellites.

Thompson said he expected no more than 13-15 commercial satellite contracts to be awarded industry-wide this year, and about the same amount in 2017.

In a conference call largely given over to badly off-target profit estimates in a 10-year, $2.3-billion U.S. Army munitions contract, Orbital officials said the company’s Commercial Resupply Services-1 (CRS-1) contract for International Space Station cargo deliveries, which is winding down in about a year, will end up delivering a double-digit operating-profit margin.

Re-engined Antares rocket’s first flight delayed to late September

Orbital on May 31 test-fired its Antares rocket in its new engine configuration featuring two Russian RD-181 first-stage engines. The 30-second test was a success, allowing Orbital to release program management reserves and thus increasing its profit.

The first flight of the new-version Antares rocket carrying the Cygnus freight-filled canister has been delayed by a month, to late September.

Orbital Chief Operating Officer Blake E. Larson said the delay was due to “a variety of interrelated factors, including the company’s continued processing and inspection and testing of the flight vehicle at the Wallops Island launch site, and NASA’s scheduling of crew activities on the International Space Station in preparation for upcoming cargo and crew launches.”

Orbital’s Space Systems division, which includes the commercial satellite and a portion of the CRS contract, reported $265 million in revenue for the three months ending June 30, down 10.8 percent from a year ago. But the improved CRS program profitability helped raise the operating profit margin to 12.4 percent from 10 percent a year ago.

Heavy-lift rocket design with US Air Force, satellite-serving vehicle progress

Orbital has been investing, with the U.S. Air Force, in initial studies on a heavier-lift rocket. Thompson said the preliminary design review of the vehicle was completed in in the three months ending June 30, and that the company and the Air Force would decide in mid-2017 whether to embark on a four-year development program.

Orbital in and satellite fleet operator Intelsat in April signed a five-year contract, valued at more than $100 million, to build a vehicle that would refuel aging but otherwise healthy satellites in orbit.

Thompson said the vehicle completed its system design review in June, and that Orbital placed contracts for initial hardware components. The vehicle is scheduled for launch in late 2018, with a first servicing mission in 2019 after extensive in-orbit testing. Thompson said the program so far has met its schedule, cost and performance milestones.

Peter B. de Selding was the Paris bureau chief for SpaceNews.