Patria’s Financial Review for 2016 – preliminary data
Patria Group's earnings for the financial year 2016 measured up to expectations. Net sales grew and profitability was at a good level. During the financial period, the competition authorities approved a share transaction in which the State of Finland sold 49.9 percent of Patria Oyj to Kongsberg Defence & Aerospace AS. The total value of the transaction is EUR 283.5 million. The State of Finland now owns 50.1 percent of Patria Oyj. In this connection, an extraordinary shareholders' meeting appointed a new Board of Directors for Patria Oyj, which named Olli Isotalo, M. Sc. (Eng.), the new CEO.
Key figures
New orders and order stock
The value of new orders received during the financial period was EUR 268.5 million (EUR 299.0 million in 2015). Defence material and life cycle support accounted for 88% (92%) and civilian products for 12% (8%) of the new orders. At the end of December, the Group’s order stock was EUR 857.7 million (EUR 1 056.4 million).
Net sales and profitability
The Group’s net sales for the financial period increased as predicted 14.6% from 2015 and totalled EUR 489.9 million (EUR 427.7 million in 2015 and EUR 462.0 million in 2014). Defence material and maintenance accounted for 95% (93%) and civilian products for 5% (7%) of the net sales. Sales outside Finland for the Financial Period accounted for 41% (31%) of the net sales.
The Group’s operating profit for the Financial Period was EUR 74.6 million, representing 15.2% of net sales (EUR 46.8 million, 10.9%). The consolidated income before taxes for the Financial Period amounted to EUR 71.7 million (EUR 44.4 million). The Group’s return on equity for the Financial Period was 26.2% (19.0%).
Significant projects
Many projects and strategic partnerships important for the future of the company proceeded as planned during the financial year. In January Patria announced a significant order for Patria AMV 8x8 armoured wheeled vehicles to be delivered to the United Arab Emirates. This agreement continues the successful co-operation between the UAE Armed Forces and Patria.
In May Patria acquired a minority stake (25%) in Silverskin Information Security Oy, a company specializing in cyber security. This acquisition allows Patria to expand its cyber security business, and it opens up new business opportunities both in the international market and in Finland.
In June Senop Oy, a subsidiary of Millog, focusing on modern sensor technology and advanced system integration, acquired the operations of Rikola Ltd Oy, an Oulu-based optoelectronics company. Following the acquisition, Rikola's business was transferred to Senop Oy, expanding the company's optoelectronics operations.
In July the AMV35 vehicle offered by BAE Systems Australia and Patria was selected to take part in the 12-month Risk Mitigation Activity for the Australian Army’s Land 400 Phase 2 combat reconnaissance vehicle program.
In September Patria signed a contract on the upgrading of the avionics systems of two Border Guard Agusta/Bell 412 EP helicopters. This system upgrade comprises the integration of avionics and mission systems, patient stretchers, infrared camera (FLIR) and video data link.
Patria Pilot Training and ASTCO Finland signed a partnership agreement on aviation security training that meets mandatory EASA requirements.
In October Finnair and Patria Pilot Training signed an agreement for training of new commercial pilots. According to the agreement, Patria will run an MPL-training program (Multi-Crew Pilot License) for Finnair together with the Finnair Flight Academy.
Patria signed a contract with Airbus for the manufacture of Airbus A320 Vertical Tail Plane components in October. The agreement covers re-industrialization activities and manufacture of the A320 VTP Ribs during the lifespan of the aircraft programme.
In December the last F/A-18 Hornet multi-role fighter to be upgraded to Mid-Life Upgrade 2 was handed over to the Finnish Air Force. The upgrade included hardware and system installations and changes required by air-to-ground weaponry.
During the year, Patria attended several major defence industry events, eg. DIMDEX event in Qatar, DefenceServices Asia event in Malaysia, Black Sea Defense & Aerospace event in Romania, Eurosatory in France, DVD2016 event in the UK and Helitech International event in Holland.
Responsibility and transparency of operation
In 2016 Patria continued to invest in the development of ethical conduct as well as in its actions as part of the Society’s Commitment to Sustainable Development coordinated by the Ministry of Environment. Patria has pledged to develop the energy efficiency of the real estate property it manages and to further enhance occupational safety in order to reduce the number of accidents at work.
Patria and Vapo signed an agreement on cooperation regarding the development of energy solutions and partnership. The parties agreed to develop energy efficiency and increase the proportion of domestic fuels used. They also signed two significant, long-term agreements on heat supply.
Patria continued to support third-sector work to prevent social exclusion of young. Patria supports the restoration of the VL Myrsky, the only Finnish fighter aircraft to go into serial production. An important part of the restoration project involves young people working in youth workshops in Jyväskylä and Vantaa or studying in technical education institutions.
Outlook
Patria’s domestic customer, The Finnish Defence Forces, has significant projects in progress. These projects are extremely important to Patria and to Finland’s entire defence industry and its future. The development of the order stock depends on whether certain large export projects, now at the tendering stage, are launched on international markets. Internal action will be taken to increase the cost-effectiveness and flexibility of operations.
Further information:
The Annual Review for 2016 will be available after the Annual General Meeting to be held on 28 April 2017. The review will be available on Patria's website at www.patria.fi.
Chief Financial Officer Ville Jaakonsalo, p. +358 500 881 070, [email protected]
Patria is a trusted provider of defence, security and aviation life-cycle support services and technology solutions. Patria has operations and projects in countries such as Finland, Sweden, Norway, Estonia, Poland, United Arab Emirates, USA and South Africa. Versatile duties employ today some 2,800 skilled professionals.
www.patria.fi
