Switzerland’s Ruag Space Foresees Continued Growth at Competitors’ Expense

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BERLIN — Ruag Space AG, whose purchase of the largest space-hardware contractors in Sweden, Austria and Switzerland since 2008 has created Europe’s largest independent space system supplier, forecasts taking enough business from its competitors to grow by 6 percent, on average, through 2015, Ruag Space Chief Executive Peter Guggenbach said.

The growth, he said, will have to come from increasing the company’s current market share in European government programs because government space spending in Europe is not likely to increase materially in the coming years. It will also come from a planned focus on increasing its U.S. business.

Zurich, Switzerland-based Ruag was a virtual unknown in the space business until 2008, when it concluded the acquisition of Saab Space of Sweden and Austria’s biggest space company, Austrian Aerospace. In 2009, it purchased Oerlikon Space of Switzerland, in a deal that closed earlier this year.

Including the Oerlikon contribution, Ruag space reported 2009 revenue of 226 million Swiss francs, or $202 million at current exchange rates.

In a June 9 interview here during the Berlin air show, ILA 2010, Guggenbach said the forecasted 6 percent compound growth rate through 2015 is what Ruag plans for its current portfolio and does not presume any major acquisitions. “Monopolies in this market are being broken apart now,” he said. “We believe our flexibility will help us grow.

Ruag Space counts 1,100 employees and operates eight industrial sites in Sweden, Austria and Switzerland. It will not be shutting down facilities in the interest of consolidation. “The acquisitions were not done with a lot of synergies in mind,” Guggenbach said. “The businesses are really complementary.”

Ruag, whose equity is 100 percent owned by the Swiss government, is at least informally obligated to maintain a presence in all three nations to continue to receive contract awards for government space programs, either directly from the individual governments or through the 18-nation European Space Agency (ESA).

But Ruag, which now has more than 300 different product lines, is pruning its portfolio to concentrate on a smaller number of products with the highest growth potential.

The company’s current revenue base is 70 percent European, with most of the remaining 30 percent coming from the United States. Ruag’s Swedish and Swiss divisions build launch vehicle structures and payload-separation systems for Europe’s Ariane 5 and Vega rockets, and for the Atlas 5 vehicle built by United Launch Alliance in the United States.

The business also includes payload adaptors for the U.S. Delta, Russian Proton, U.S.-Russian-Ukrainian Sea Launch, Russian Soyuz and U.S. Taurus rockets. The launcher division is Ruag’s biggest space division, accounting for 31 percent of revenue.

Its satellite structures business, mainly done through the Austrian and Swiss divisions and including solar array drive mechanisms, accounts for 29 percent of revenue. Digital electronics for rockets and satellites, including guidance and control computers and data-handling systems for satellites, produced from the Austrian and Swedish operations, represents 24 percent of Ruag’s revenue. Satellite communications hardware and individual satellite instruments account for the remaining 16 percent.

Aside from securing its current market position, which will depend in part on the annual space spending by its three governments, Ruag is looking to the United States for growth.

“What we are weighing now are different approaches to how to increase our U.S. market share,” Guggenbach said. “We are comfortable that the market niches we occupy now are good places to be. What we are not sure of is whether the U.S. market is best approached by purchasing a U.S. company, or otherwise establishing a presence in the U.S.”