Patria Group’s Interim Report for 1 January – 30 September 2019: New President and CEO, growth in civil pilot training and AMVXP vehicles selected to Japan’s testing phase
In the third quarter there were three highlights. Esa Rautalinko started as President and Chief Executive Officer of Patria Group. Patria made a three-year agreement with Turkish Airlines to train their new pilots. Patria’s armoured modular vehicle AMVXP was chosen to a one-year field testing in Japan after a competitive bidding. Financially the third quarter was at a modest level.
Esa Rautalinko, 56, Master of Science (Economics), started as President and Chief Executive Officer of Patria Group in the beginning of July 2019. Under the new leadership Patria will continue to strengthen its service business' internationalization strategy and its implementation further.
“Patria is a major cornerstone in the Finnish defence industry and a strategic partner to the Finnish Defence Forces. I am impressed by the solid competence we have within a broad area of the defence market. I am sure, both with the products, services and technologies we offer, as well as with more than 3,000 of skilled people we will continue being a strong partner, not only for the Finnish main customer, but also for our international customers,” says Rautalinko.
Patria Group’s net sales for the first three quarters were at a modest level, totaling EUR 341.6 million. Operating profit was EUR 0.8 million, burdened by delays in certain international sales projects. Equity ratio was 41.9% and net gearing 71.9%. Going forward, the group places further focus on the operational effectiveness of its operations.
The first three quarters of 2019
In January Patria and the Finnish Defence Forces signed an agreement on preliminary and basic pilot training services. The contract covers pilot training and maintenance of aircraft.
In February, Patria made an agreement with the Kazakh airline Air Astana to train their new pilots till 2022.
In the end of February Patria published news about a joint project with the Finnish Innovation Fund Sitra and HUS Helsinki University Hospital, in which a method is being sought to transfer information between the patient and a professional. Patria’s role is to provide support in ensuring the cybersecurity of the project’s data and information systems.
In April Patria announced to relocate the initial civil pilot training operations from Tampere-Pirkkala, Finland to city of Córdoba in Spain. Patria’s single-engine DA40 fleet will be based in Córdoba while theoretical training, simulator training and multi-engine training with DA42 fleet will remain in Finland.
Senop and the Finnish Defence Forces Logistics Command signed a letter of intent on the development of weapon-mounted laser sights and helmet-mounted image intensifiers for soldiers. The goal of the development cooperation is to create a procurement capacity in the Defence Forces for domestic night-fighting equipment that combine high performance, security of supply, cost-efficiency and compatibility with the current and future soldier’s kits.
In June Patria acquired 100% of the shares of Belgium Engine Center SPRL (BEC) from AIM Norway. BEC is a military jet engine maintenance, repair and overhaul (MRO) center that services the Pratt & Whitney F100 engine which powers F-15 and F-16 aircraft around the globe. The center also provides material management services for those engines. BEC has its operating base in Herstal, Belgium, and has about 90 employees. The acquisition is part of the execution of Patria’s strategy in which the main growth area is international maintenance and life-cycle support business, particularly in Europe.
AIM Norway (Aerospace Industrial Maintenance Norway AS) acquisition was completed. The company is now owned by Kongsberg Defence & Aerospace AS (KDA) (50.1%) and Patria (49.9%). AIM Norway provides maintenance, repair and overhaul of aircraft and helicopters for the Norwegian Air Forces. The acquisition is a logical continuation of Patria’s work for the Norwegian defense forces in the helicopter area supporting their NH90 and Bell 412 fleets.
Patria announced that it is preparing to offer its solution for remote-operated air traffic control system in Finland. It is based on a product of Kongsberg Defence & Aerospace, used in Norway. The system’s implementation and maintainability are supported by Patria’s technical abilities, the well-functioning collaboration between the company and authorities, and the company’s nationwide maintenance network, which all ensure the availability of the system even during crisis.
Patria Belgium Engine Center SRL was awarded a new seven-year contract by the Danish Ministry of Defence Acquisition and Logistics Organisation (DALO) to sustain the Royal Danish Air Force (RDAF) fleet for the remaining lifetime of their F16s.
In June Patria signed an agreement with Leonardo Helicopters for the maintenance, repair and overhaul of the Norwegian Police’s new AW169 helicopters. The work will take place in Gardermoen, Oslo Airport, and the agreement covers 10 years.
In September Patria made a three-year agreement with Turkish Airlines to train their new pilots. The training will take 14 months at Patria’s bases in Córdoba, Spain and Tampere-Pirkkala in Finland. Civil pilot training business is growing rapidly and accordingly, Patria will grow its training fleet to match the need for additional capacity. Patria has invested in its modern training aircraft fleet and recently received two DA40 NG aircraft.
Patria’s armoured modular vehicle AMVXP was chosen to a one-year field testing in Japan after a competitive bidding. The Japanese Ministry of Defence will buy two vehicles from Patria for the tests. Two other companies have also been selected to deliver their vehicles to the tests. The final selection is to be expected after the trials.
In the end of October Patria announced to start employee co-operation negotiations in its Land Business Unit. Negotiations concern 270 persons in Hämeenlinna and Tampere. Negotiations are started due to the productional and financial reasons, as certain significant Land export projects have been postponed.
During the first three quarters Patria attended IDEX 2019 event in Abu Dhabi, Rotorcraft & Unmanned Systems Asia event in Singapore, XPONENTIAL 2019 event in Chicago and DSEI in London.
Outlook for the rest of the year
Patria will continue to strengthen its service business' internationalization strategy and its implementation further as well as increase the effectiveness of its operations.
The significant domestic HX Program for replacing the current Hornet fleet with new fighters continues, and Patria will negotiate with the manufacturers about the industrial participation, which is extremely important and a great opportunity to Patria.
Ville Jaakonsalo, Chief Financial Officer, tel. +358 500 881 070, [email protected]
Patria is an international provider of defence, security and aviation life cycle support services, pilot training 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 476.1 million in 2018, 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