Patria Group Interim Report for 1 January–30 June 2012
Strong order stock the foundation for 2012
Patria's strong order stock has created a firm foundation for continued profit performance during the current financial year. Net sales for the first six months of the year totalled EUR 324.7 million, compared to EUR 283.6 million last year (+14.5 %). Similarly, operating profit rose to EUR 23.8 million from EUR 17.1 million in 2011. The equity ratio stood at 42.6% – an improvement of 0.6% on last year. Net gearing was 23.8%, compared to 7.3% in 2011.
Several factors contributed to the company's improved profits. New orders for Patria's AMV vehicles went into production and favourable trends continued at Millog Oy. Other projects also progressed according to plan, such as the design and manufacture of ballistic protection shields for NH90 helicopters; the Rauma class missile boat upgrade; the Hornet Mid Life Upgrade 2 (MLU2) programme; and cockpit and avionics upgrades to Hawk Mk66 aircraft.
Patria's order stock has been slow to develop, and this reflects the market both in Finland and abroad. Defence projects are not a priority, as many potential customers are struggling with financial difficulties.
Early 2012
In early 2012, Patria and the Volvo Group signed a cooperation agreement on lifecycle support services. The two companies are putting in joint tenders to the Swedish Armed Forces for its potential overhaul of logistics and maintenance. Patria already has an agreement to deliver 113 AMV 8x8 armoured wheeled vehicles to the Swedish Armed Forces to supplement their existing fleet of about 200 Patria XA 6x6 vehicles. The Volvo Group has long supplied vehicles to the Swedish Armed Forces and boasts an extensive maintenance and upkeep network.
Early this year, Patria Pilot Training and Finnair Flight Academy agreed to cooperate on training. They aim to sell Multi-Crew Pilot Licence (MPL) flight training to airline companies operating Airbus A320 aircraft. In the future, training will also be offered to operators using the Embraer 170/190 and ATR42/72 aircraft. The programme's first trainee intake is scheduled for early 2013.
In June, Patria Land Systems and Land Services completed their co-determination negotiations on the companies' operational reorganisation. The heavy ammunition unit, which employs about 30 people, will continue operations in Sastamala. Other operations in Sastamala and Vihtavuori will be relocated to units in Hämeenlinna and Tampere. All those affected by the co-determination negotiations were offered employment, although some people may have to relocate to another municipality in order to remain with the company.
Millog Oy's subsidiary, Oricopa Oy, also launched co-determination negotiations in June as a result of financial, production and operational restructuring. Oricopa Oy's order stock has fallen during 2012 due to, for example, cutbacks in the Finnish Defence Forces. The negotiations affect all personnel in Tampere and Orivesi, a total of 65 people.
In June, Patria and Croatian company ÐURO ÐAKOVIĆ Holding d.d. (DDH) signed a framework agreement that will strengthen the companies' joint efforts to sell Patria AMVs to selected third-party countries on a case-specific basis. DDH will act as the chief supplier and will also play a significant role in the vehicles' manufacture. DDH has obtained the required production technology from Patria. ÐURO ÐAKOVIĆ Specijalna vozila d.d. (DDSV), a subsidiary of DDH, has already delivered over 70 vehicles manufactured in Croatia.
Patria published its first social responsibility report in June. The report was prepared in accordance with the updated government guidelines for Finnish state-owned companies issued by the Finnish Government on 3rd of November 2011. Patria seeks to engage in long-term, profitable operations that consider financial, social, human and environmental issues. These issues will now be reported on using even more systematically formulated, comparable benchmarks.
Potkua Liikuntaan, a three-year exercise project supported by Patria, is now midway through and has produced very favourable results. The project aims to promote a sports-oriented lifestyle among national service conscripts and thereby improve young people's quality of life. After the project team began working with training units to improve sports clubs' activities, national service conscripts took 25.8 per cent more exercise while off duty.
Outlook for the rest of the year
Thanks to significant orders received in previous years, operations will remain stable during the second half of 2012. However, budget cuts in both the Finnish and global defence industry coupled with legislative amendments on defence-related acquisitions will intensify competition for new projects in the long term. The Slovenian vehicle project still involves risks that, should they be actualised, could have a significant negative impact on the Group’s result.
It's possible that, during the final months of the year, projects suited to Patria's export range will make a breakthrough in important global markets, most of which are currently located outside Europe.
For further details contact
Birgitta Selonen, Vice President of Corporate Communications, tel. +358 (0)40 869 2043, [email protected]
Patria is a trusted provider of defence, security and aviation lifecycle support services and technology solutions. Patria is owned by the State of Finland (73.2%) and the European Aeronautic Defence and Space Company (EADS N.V.) (26.8%).
www.patria.fi
