Posting record sales, OEM ramps up production

 - February 28, 2008, 5:12 AM

At a news conference in Paris in late January, Eurocopter disclosed its results for last year–an all-time high in sales that surpassed the previous record set in 2006. Lutz Bertling, the CEO of the Franco-German-Spanish helicopter manufacturer, also outlined his strategy for expanding the company’s influence in the coming years.

Eurocopter recorded orders for 802 helicopters worth $9.5 billion (E6.58 billion) last year, breaking the previous record of 615 in 2006. The backlog now stands at $20 billion (E13.5 billion). According to Eurocopter, the company’s best seller is the Ecureuil/ EC 130; the company received orders for 325 of the helicopters, including military versions.

The EC 135 light twin is the next best-selling helicopter, with sales of 134 for the year. Then come the BK 117/EC 145 (88 helicopters), the EC 120 Colibri (73), the Dauphin/Panther (47) and the Super Puma/Cougar (22). Bertling noted that the executive/corporate segment has grown by 30 percent every year since 2005.

The EADS subsidiary last year delivered 488 helicopters, 28 percent more than in the previous year. Revenues increased by 10 percent, to $6 billion (E4.17 billion). This happened although the company has been affected by the falling value of the U.S. dollar. Civil and parapublic sales accounted for 51 percent of the turnover. The highest increase is in light helicopters, Bertling said, which explains why the 30-percent growth in the number of aircraft sold is not reflected in the 10-percent increase in revenue.

Bertling would not give an operating profit margin figure for last year. But he recalled that the margin in 2006 was 6.4 percent and said Eurocopter is on track for 8- to 10-percent margin by 2010. He predicted around 600 deliveries and about the same number of orders for this year.

To double revenues in 10 years, “external growth is part of the story,” Bertling said. He hinted at acquiring a company in the service area. “In helicopters, there is no equivalent to big [maintenance, repair and overhaul] firms such as Air France Industries or Lufthansa Technik,” he said.

“It is my belief that Eurocopter must be not only a mission solution provider to its customers, but also a full-fledged service provider. During 2007, we set up a 24/7 hotline service center for our customers; we created a fleet safety directorate; we inaugurated an EC 135 simulator center and we established a new maintenance center in Abu Dhabi with Falcon Air Services,” Bertling noted, in addition to military service initiatives. Eurocopter is offering packages of services that are essentially power-by-the-hour contracts. The company–Eurocopter or a partner–can provide all the maintenance, even cleaning or fueling, Bertling told AIN.

However, growth in service activities is slow–it currently accounts for 33 percent of the business, versus 31 percent last year. Again in the service area, Bertling conceded that Eurocopter is “not the benchmark for customer support,  but we are on the way.”

The company’s focus this year is the same as it was last year: “Continue to efficiently manage the ramp-up by further optimizing industrial processes,” according to Bertling. He declined to provide a figure for the on-time delivery rate, which was 96 to 97 percent in 2006. However, he insisted the production ramp-up has not damaged that rate or parts deliveries.

Bertling said he wants Eurocopter to become even more international. One goal is to increase the proportion of industrial activities outside France, Germany and Spain from 10 to 30 percent. Simultaneously, the proportion of non-European employees should be increased from “less than 20 percent” to 30 percent. The bottom line should be access to funding through international presence and partnerships.

Eurocopter has been negatively affected by the decreasing value of the U.S. dollar, but Bertling says he aims eventually to achieve total independence from the U.S. dollar. In fact, 25 percent of the company’s turnover is in U.S. dollars. Half of it is hedged, either via financial hedging or naturally, because the company accrues some costs in dollars. So the company will focus on finding suppliers in the dollar zone and moving existing ones and “some of our own non-core activities” into the dollar zone, Bertling said. “But we should beware of the yuan,” he emphasized.

Another part of the company’s strategy is to reduce the number of suppliers from 3,000 to 300. “We need to be attractive; today we account for only a small portion of our suppliers’ [revenue],” he noted.

Bertling said the company will stage, every year, the first flight of a demonstrator, a new product or a major upgrade. Market introduction of fly-by-wire controls in a civil helicopter is expected in the next decade.