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New Finmeccanica CEO Hints at DRS Sale

Jul. 14, 2014 - 03:45AM   |  
By TOM KINGTON   |   Comments
Finmeccanica CEO Mauro Moretti (Finmeccanica)
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FARNBOROUGH, ENGLAND — Mauro Moretti, the recently appointed CEO at Italian defense group Finmeccanica, has hinted that he might consider selling US unit DRS as part of a major shake-up at the group.

Speaking to reporters Monday at the Farnborough International Airshow, Moretti said DRS’s non-core activities — which he defined as “a series of small activities” without being specific — could be sold off “rapidly.”

Core activities at the electronics firm would be analyzed to see what synergies they offered with the rest of the group, he said. If synergies were developed, he added, there would be “great opportunities.”

Asked whether the core activities would be sold off if no synergies were found, Moretti answered, “We will evaluate that.”

See full Defense News coverage of the Farnborough Airshow

Finmeccanica paid $5.2 billion for DRS in 2008, but has seen the firm suffer as pull-outs from Iraq and Afghanistan cut into its US Army military contracts. Moretti said Army contracts had dropped from more than 60 percent to 25 percent of revenue.

Early ambitions by Finmeccanica managers to build synergies between DRS programs and Finmeccanica programs, as well as intentions to find more export markets for DRS products, appear to have had limited success.

DRS is run under a proxy agreement with the US government, a set-up that Moretti said he was studying. The firm was not involved in a process launched by Moretti in June to turn Finmeccanica’s semi-autonomous units into divisions.

Moretti, who replaced Alessandro Pansa at the helm of Finmeccanica in April, said he envisaged the closer integration of the group’s activities as saving around 20 percent on group costs thanks to savings made in areas including research and marketing.

The group needed to end “conflicts” and “friction” between units, he said, citing activities include UAVs. Finmeccanica units Selex and Alenia Aermacchi both have their own UAV programs.

Finmeccanica, he said, needed to focus on three core tasks — the development of new technologies, a focus on aerospace and defense and a rationalization of the product line.

“We are doing too much,” he said, adding that other firms were having difficulty doing one third of what Finmeccanica does. “Imagine us.”

A new industrial plan, which Moretti said would be ready by year end, would focus on retaining high-technology activity that gave high returns, he said.

Asked about Finmeccanica’s role on the F-35 Joint Strike Fighter program, Moretti said, “We must not only do structures, but also integrate avionics, sensors and radars with Italian systems” — in keeping, he added, with what had been achieved with the earlier Typhoon and Tornado programs.

Moretti appeared to rule out the possibility that Finmeccanica would sell its stake in MBDA, saying the firm “gives us great satisfaction.” Plans to sell loss-making railway unit Ansaldo Breda were going ahead, he said, with purchase offers to be analyzed in the autumn. ■


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