Acquisitions and factory expansion, especially in low-cost production locations, led to an almost one-third jump in year-over-year revenues in 2004 at French aerospace equipment maker Latécoère. According to president and CEO François Bernard, production increased across all its aerostructures programs, and especially for the new Airbus A380 airliner, the Dassault Falcon 7X business jet and the Embraer 170/190 regional jets. He expects the trend to continue with 20-percent increases in revenues both this year and in 2006, and said the company is committed to a capital increase to finance investments in these programs.
Latécoère, founded in 1917 as the first company to set up an aircraft assembly plant in France, stopped producing aircraft in the 1950s. Today it produces fuselage sections, such as passenger and bulk cargo doors, which account for 77 percent of its revenues. It derives the other 23 percent from onboard wiring, especially video camera systems, avionics bays and electrical harnesses. Consolidated revenues last year jumped 33 percent to €260.3 million ($320.2 million), while net profits increased by 29 percent to €18 million ($22.1 million) and operating profit climbed 22 percent to €28.5 million ($35 million).
According to Bernard, this year the company will see further recovery fueled by a buildup of deliveries. At the end of 2004 the group recorded a 22-percent leap in its backlog of firm orders, for a total of €1.05 billion ($1.2 billion), the equivalent of the previous four years of sales. Over the past 10 years the group’s workforce has almost quadrupled– from 660 to 2,400.
The Toulouse-based group’s net debt, which increased by almost 40 percent last year to €200 million ($246 million) from €144 million ($177 million) a year earlier, is set to rise further to finance investment in new programs and especially the proposed–but not yet launched– A350 airliner. At an extraordinary meeting recently its board authorized a capital increase through the issue of up to 2.4 million new shares (40 percent of the current total). It expects to complete the move by the end of next month.
Much of Latécoère’s increased revenue derives from Brazil, where the equipment maker established a subsidiary to supply Embraer’s 170/190 family. Despite some initial concern over the plight of the 170’s launch customer–US Airways–a strong increase in overall orders put earnings from Embraer at 23 percent of the French group’s total activity.
In addition to establishing the 100-percent owned Brazilian subsidiary, Latécoère began work early this year on a new building near Embraer’s main plant at Saõ José dos Campos specializing in finishing airframe sections delivered to the airframer. Meanwhile, in December, its Czech Republic-based subsidiary Letov inaugurated its second assembly building and began work on a third building for the production of composite materials.
Airbus accounted for 54 percent of Latécoère orders, including avionics bays and fuselage sections for the airbus A400M military transport, as well as the doors and a wide range of electronic parts for the A380. In addition to supplying the bulk cargo door of the Bombardier CRJ700/900 regional jet family, the company is also in line for a contract on the Canadian airframer’s planned new C Series airliner.
Boeing recently selected Latécoère to supply doors for its 787 airliner. The company expects that Boeing will account for up to 15 percent of its revenues by the end of the decade.
