Finmeccanica SpA, Italy’s biggest defense company, plans to sell at least 1 billion euros ($1.36 billion) of assets in mainly civilian units through 2012 and cancel dividends after forecasting a surprise loss this year.
Finmeccanica slumped as much as 17 percent to the lowest price since December 1996 in Milan trading after predicting an adjusted loss before interest, tax, amortization and restructuring of 200 million euros in 2011. That compares with its earlier forecast of as much as 1.6 billion euros in profit.
Chief Executive Officer Giuseppe Orsi is undertaking Finmeccanica’s biggest overhaul in at least a decade, focusing on military businesses, after discovering unprofitable contracts and inefficiency at aeronautics and transport divisions. The Rome-based company said today that it will set up a partnership for the AnsaldoBreda trainmaking unit in advance of selling the business.
“Weak results, restructuring and charges were widely expected, but we believe investors will be somewhat disappointed that the full extent of the charges will not be known until full-year results and that divestiture actions are not promised until the end of 2012,” Joseph Campbell, an analyst at Barclays Capital, said in a note….
Finmeccanica is accelerating its reorganization after highlighting “structural issues” in July, when it said disposing of AnsaldoBreda was an option being considered….
“We are addressing those areas that have underperformed to create a new Finmeccanica that is fit for the future,” Orsi said on a conference call. “Internally, we have made good progress in the last months. It is a work in progress. The proof will be in the execution over the next year.”
The manufacturer, which also owns helicopter maker AgustaWestland, has been in talks with “key players” on AnsaldoBreda’s rolling-stock operations, Orsi said. Finmeccanica would be interested in selling the entire railway-related business should investors also be interested in its stake in the Ansaldo STS signaling venture, he said….
read … Bloomberg
…Finmeccanica meanwhile is pushing to sell money-losing operations in Italy, which is ensnared in the euro-zone debt crisis. Italy is facing another round of austerity measures as an emergency government prepares to take office. News that Finemeccanica, one of the country's biggest manufacturers, wants to restructure in Italy is likely to rankle unions and the political elite.
The company also said it was suspending its dividend for the year, delivering a further blow to the finances of its controlling shareholder, the Italian state. Finemeccanica's shares closed 20% lower on Tuesday.
"There are uncertain times, and they call for extraordinary measures," Chief Executive Giuseppe Orsi told analysts at a London presentation.
The company had been willing to invest in activities that helped prop up Italy's struggling industrial sector. But those moves have weighed heavily on the company's finances and have made the company unwieldy.
Mr. Orsi now wants to focus on core businesses such as the company's Alenia trainer jets and AgustaWestland, a supplier to the U.S. presidential helicopter. His efforts to sift through Finmeccanica's unprofitable Italian activities, however, have generated tensions with Italian politicians.
Fitch ratings service expressed doubts about Finmeccanica's restructuring plan and said it would review the measures to see whether the company should keep its BBB rating….
Among the divisions he is looking to sell is AnsaldoBreda, which makes trams and trains. Mr. Orsi said he had received expressions of interest from a number of parties and that he is willing to sell Finmeccanica's 40% stake in a sister company, Ansaldo STS, if a buyer is willing to take both….
read … WSJ