Eurocopter expects ‘unpredictable’ 2010

 - February 22, 2010, 8:30 AM

Eurocopter in January reported unexpectedly good financial numbers for last year. Revenues stood at a record E4.6 billion ($6.44 billion), while the backlog increased by about E1 billion ($1.4 billion), to E15.1 billion ($21.1 billion), representing 1,300 aircraft. However, the manufacturer sees this year as “unpredictable” and expects civil sales will remain low. Asia and oil and gas are the only region and market segment, respectively, expected to remain fairly strong.

The Marignane, France-based manufacturer received net orders for 344 helicopters last year. The gross number was 449, but Eurocopter received numerous cancellations.

The walk-aways were apparently more numerous than the company had anticipated one year ago, when Bertling was predicting 2009 would end with net orders for about 450 machines.

Light civil helicopters suffered the most. Medium and heavy ones, both in the civil (mainly for offshore-energy operators) and military fields, enjoyed sustained sales. For example, the company booked net orders for eight EC120 Colibris, compared with 85 in 2008. At the other end of the spectrum, buyers signed for 81 Super Pumas, prompting the OEM to move production workers from light to medium helicopter assembly lines.

Last year Eurocopter delivered 558 aircraft, in line with expectations the company announced earlier in the year. By value, the civil and parapublic sector accounted for 52 percent of the turnover. Bertling would not be specific about the company’s profit (or loss), saying only that “given the difficult 2009, I am more than satisfied with our [earnings].”

Support and services, now accounting for 35 percent of the revenue, are growing faster than production activity. Bertling said that keeping operators’ helicopters flying is a major focus for the company, especially in difficult times. “This helps our customers earn money,” he said.

Eurocopter thus claims to have an “ever-growing spectrum of service solutions.” For example, there are now 24/7 customer service centers in Hong Kong and Dallas for swift reaction regardless of the customer’s time zone. In addition, the company says it has an on-time delivery record of 95 percent for commercial helicopter spares. Finally, under EASA regulation, Eurocopter is now a continuing airworthiness maintenance organization.

Another “key success factor” is proximity to the customer, according to Bertling. For example, last December the manufacturer added a maintenance branch in Thailand. The 10 employees service the EC130, EC135, Ecureuil and EC155 mainly for the Royal Thai Police.

In Brazil, establishment of an assembly line for the EC725 Cougar will start this year. Investing in the country will likely go beyond military contracts. Eurocopter sees Brazil as its next home country [in addition to France, Germany and Spain], as Bertling put it. “We will continue to expand our international footprint, notably by acquisitions,” he said.

Among its other goals, the recently launched Shape cost-cutting effort is intended to save E200 million ($280 million) annually. “We are on track for 2010,” Bertling pledged. He added that shortening the lead time from contract to delivery by 30 percent is achievable.

Despite the company’s not-so-gloomy picture in the current turbulent market conditions, Eurocopter officials fear a “delayed impact” might lie ahead. “Are bigger challenges awaiting us?” Harache wondered. He said the number of pre-owned helicopters on the market–more than 1,000, many of them delivered between 2007 and 2009–will slow the hoped-for recovery.

At E200 million ($280 million) this year, research and development spending will be 20 percent higher than last year, AIN understands. Part of it will be spent in the Green Rotorcraft research program, which is part of a wider European initiative (see related story on facing page). Eurocopter plans a full launch of the X4 program, to replace the Dauphin medium twin, by June.