Eurocopter bracing for deep but brief sales drop
Eurocopter had its second best year ever in 2008 but is anticipating more than a 30-percent fall in sales for this year. Speaking at the manufacturer’s annual press conference in Paris last month, CEO Lutz Bertling insisted the firm’s strategy is not affected by the downturn, and he outlined plans for further international expansion.
After 715 net helicopter orders in 2008, this year is expected to end with only 450 sales, Bertling said. Due to an “unpredictable environment,” the forecast will probably be reviewed often during the year. Eurocopter will be watching luxury yacht sales and the used rotorcraft market as indicators of how the industry is faring.
Last year, the company received approxmately 30 cancellations, Bertling acknowledged, adding the commercial market slowed in the second half of the year.
The segment that is suffering the most is U.S. tourism and corporate sales.
Nevertheless, best sellers again were the Ecureuil/EC 130 family, with 340 orders (civil and military), and the EC 135, with 123 orders.
Eurocopter is supporting customers in getting financing by talking to banks and credit insurers. “In some cases, we finance customers directly,” Bertling said, indicating a yearly amount of Eurocopter- financed transactions at around ?100- to 300 million ($140 to 420 million).
The company’s backlog will be little affected by the downturn in civil sales, Bertling said, thanks notably to military/governmental sales accounting for 71 percent of this ?14 billion ($19 billion) backlog. This is due to the higher value of military hardware and longer order-to-production cycles.
Of the total ?4.9 billion ($6.9 billion) bookings in 2008, 64 percent was for civil and parapublic activities, and the rest for military. Last year deliveries jumped by 20 percent, to a record 588, a number expected to be in the 550 to 580 range this year. Civil and parapublic activities accounted for 55 percent of the ?4.5 billion ($6.3 billion) turnover. The operational profit in 2008 is said to be greater than 2007’s ?211 million ($295 million) profit.
Bertling also announced three “major product upgrades” and the launch of a new helicopter “predevelopment.” The design is “completely new,” Bertling told HAI Convention News and will be an addition to the current product range. However, in the longer term it could replace an existing aircraft, he added.
The EC 175 program remains on schedule, with its first flight still planned for mid-December. There will be at least three helicopters used for flight tests. However, Bertling would not disclose the seven-metric-ton twin’s performance figures for speed and range. The aircraft is to be powered by two Pratt & Whitney Canada PT6C-67E turboshafts. EASA certification is pegged for 2011 and Chinese authority CAAC is then expected to certify the aircraft in 2012.
Harbin Aviation Industry (HAIG), Eurocopter’s Chinese partner in the medium-twin helicopter program, delivered the first airframe to the European manufacturer in November. The final assembly of the prototype will take place at Eurocopter’s headquarters in Marignane, France. The 16-passenger rotorcraft is initially targeted at the offshore transport market.
Commenting on the ongoing restructuring of the Chinese helicopter industry, Bertling asserted it should not affect distribution of employees in Eurocopter’s 50-50 venture with HAIG on the EC 175. “I appreciate the Chinese industry is getting better organized. This should improve their performance. Resources will be less scattered,” he said. He even suggested the reorganization could have a positive impact on the EC 175 program (or Z15, under its Chinese designation). Last month, China Aviation Industry Corp. (AVIC) announced that in a effort to consolidate its diverse businesses, it will build a $1.2 billion commercial helicopter plant in the northern port city of Tianjin with the local government.
Bertling is adamant that the “brief downturn” has no current impact on long-term objectives. For example, research-and-development spending will increase by 25 percent this year, he said. Also, the company is continuing to strengthen its international footprint having created last year Eurocopter Indonesia, its 18th subsidiary. “Yes, we have an expensive setup of subsidiaries but this gives us real proximity to customers,” Bertling said.
In Brazil, Eurocopter signed a major military contract in December with Helibras and is eyeing wider expansion. Helibras, the majority of which is owned by the Eurocopter, is expected to double in size very quickly.
“Helibras is becoming the nucleus of the Brazilian helicopter industry,” Bertling said. He anticipates it to be as successful in the rotorcraft market as Embraer has been in regional jets. Brazil could become a fourth home country for Eurocopter.