Patria Group Interim Report for 1 January - 30 September 2018
Patria Group’s result for the first three quarters of the year was at estimated level. Net sales totaled EUR 325.6 million (EUR 309.3 million in 2017). Operating profit was EUR 16.9 million (EUR 22.8 million). Equity ratio was 53.2% (53.7%) and gearing 38.6% (31.1%). A large part of the new orders is linked to the Systems and Land businesses and their maintenance and life-cycle support services.
The first three quarters of 2018
In January, Patria signed an agreement with the Finnish Defence Forces on the mid-life upgrade and overhaul of the Finnish Defence Forces’ Hamina Class fast attack craft. The total value of the delivery contract, excluding options, is around EUR 170 million. The estimated employment effect of the programme in Finland will be around 300 person-years. Patria will act as the prime contractor, designer and lead system integrator having the overall responsibility for the project.
Kongsberg Defence & Aerospace and Patria entered into an agreement to develop opportunities for cooperation on Missile Systems. The agreement comprises the establishment of a Missile Competence Center in Finland, Open Tactical Framework (OTF) core technologies and system architecture software for missile programs in Finland and international opportunities linked to these capabilities.
The Estonian Centre for Defence Investment renewed the public contract with Patria’s subsidiary Milrem LCM, provider of defence vehicle lifecycle management, for repair and maintenance of the Patria XA-180 and XA-188 armoured vehicles.
Finland's first 3D-printed aircraft engine part had its maiden flight in January. The part was installed in the F/A-18 Hornet fighter. Patria has been working on the manufacturing process for 3D-printed parts over the last two years and is continuously involved in exploring new repair methods utilizing the latest manufacturing and repair processes.
In February, Patria was in the middle of media attention in Finland in connection with a Finnish businessman tragically deceased in Uganda. The incident led to immediate corrective measures and changes in the management of Land business unit.
In March, Patria’s subsidiary Senop Oy signed a contract with the Norwegian Kongsberg Defence & Aerospace AS for the supply of the integrated command post shelters. The contract is a continuation for a long-term co-operation between Kongsberg and Senop. The deliveries will take place in 2019.
In April, Patria signed an agreement on bridge-laying equipment systems. The Finnish Defence Forces will get four new Leopard 2L bridge tanks with ability to handle Leguan bridges of different lengths. The purchase’s total value is EUR 28,6 million and its employment effect with options in Finland is some 55 person-years of which Patria’s employment effect is some 35 person-years. The deliveries will take place in 2019 - 2021.
In April, Patria’s subsidiary Milrem LCM and BAE Systems signed a contract to support Estonia’s fleet of CV9035 Infantry Fighting Vehicles (IFVs). Milrem will provide maintenance and repair services for CV9035 vehicles from its facilities in Estonia.
During April and May, employee cooperation negotiations in Aerostructures and Land business units were finalised. In Aerostructures, the negotiations resulted in reductions that affected 13 persons as redundancies or lay-offs until further notice. 14 persons have been temporarily laid-off part-time. In Land, the need for reduction was determined as 10 persons and at most 25 persons have their duties adjusted.
In May, Ingvar Pärnamäe was appointed as the new CEO of Milrem LCM.
In June, Patria Aerostructures Oy acquired all the shares in Patricomp Oy, which operates in aircraft sheet metal part manufacturing, surface treatments and assemblies.
In June, Patria launched new products at Eurosatory event in Paris: two new passive RF sensor products, MUSCL for battle-proof air surveillance, ARIS-E ESM system for tactical situational awareness, and a new Patria 6x6 vehicle with its multifunctional transport capacity and modularity that adapts easily to customers’ needs.
In August, the Board of Management of Patria was strengthened by a new position of Chief Business Development Officer to support the implementation of the strategy, and by two new business unit Presidents. Pasi Niinikoski was appointed as Group’s Chief Business Development Officer, Teemu Raitis as President of Land business unit and Jonas Geust as President of Systems business unit.
In September Ugis Romanovs started as Managing Director of Milrem SIA to develop defence sector services for the Latvian market.
In September, Patria AMV 8x8 vehicle took part in the European Land Robot Trial (ELROB) in Belgium. One of the R&D focus area within users of military vehicles is unmanned feature and to this end Patria has developed integrated drive-by-wire control system. This system enables use of remote and autonomous functions while keeping standard driver operated operation possibility in the same vehicle.
Highlights after the financial period
Patria Aerostructures Oy completed the acquisition of all the shares in Patricomp Oy from Aerometallic Components SAU.
Patria Helicopters AB received an order for Hkp16 (Black Hawk) maintenance as the Swedish Defence Materiel Administration (FMV) was excercising their option. Patria and the FMV signed an agreement in 2014 on the support of the Swedish Armed Forces Hkp16 Black Hawk helicopters’ maintenance. The agreement covered the period 2015-2017 with an option for extension through 2020. Estimated value of the agreement, including options, was approximately 25 MEUR.
Patria attended Helitech International 2018 in Amsterdam, where its helicopter life-cycle support services covering a full range of maintenance, repair and overhaul (MRO) and supply services for helicopters, their components and equipment as well as helicopter upgrades and modifications were showcased. As FAA and EASA 145 repair station, Patria is a one-stop shop for comprehensive helicopter maintenance for Airbus Helicopters, Bell Helicopter and Leonardo, as well as NHI NH90 Nordic Service Center.
Outlook for the rest of the year
Patria’s domestic customer, the Finnish Defence Forces, has significant projects (HX, SQ 2020) in progress. Industrial participation is extremely important and a great opportunity to Patria. General development and changes in the security environment have also increased defence budgets and readiness requirements. These are likely to have a positive effect for Patria’s sales and profitability in the long run but not having an impact during 2018. The net sales is nonetheless estimated to improve from the last year.
For more information, please contact:
Ville Jaakonsalo, Chief Financial Officer, phone +358 500 881 070, [email protected]
Patria is an international provider of defence, security and aviation life cycle support services and technology solutions. Patria provides its aerospace and military customers with equipment availability, continuous performance development as well as selected intelligence, surveillance and management system products and services. Patria’s mission is to give its customers confidence in all conditions, and the vision is to be the #1 partner for critical operations. Patria has several locations including Finland, Sweden, Norway and Estonia. Net sales totaled EUR 467.7 million in 2017, and Patria employs 2,800 professionals. Patria is owned by the State of Finland (50.1%) and Norwegian Kongsberg Defence & Aerospace AS (49.9%). Patria owns 50% of Norwegian Nammo, and together these three companies form a leading Nordic defence partnership.
www.patria.fi
