PARIS — French company Naval Group has reported a sharply higher operating profit in the first half of 2018 compared to a year ago, reflecting the company’s productivity drive.
A French contract for the fifth Barracuda nuclear-powered attack submarine was among the orders in the first half, which fell compared to a year ago.
Operating profit rose to €126 million (U.S. $147 million) from a restated €64 million, marking 6.8 percent of sales, up from 3.8 percent, the company announced July 18. The figure for the first half of 2017 was restated from €84.7 million to meet official changes in financial reporting.
Net-attributable profit rose to €104 million from €65.9 million, on sales of €1.9 billion, up from €1.7 billion. Some 29 percent of sales came from export deals. Naval Group has a target of boosting exports to half of annual sales, with the domestic market making up the other half.
That rise in profitability showed “the success of our progress plan and confirm(s) the improvement of our operational control,” Frank Le Rebeller, executive vice president for finance, legal and purchasing, said in a statement with the results.
Naval Group has pursued tighter control of programs and higher profitability over the last three years.
Orders fell to €1.9 billion from €2.6 billion, reflecting a spike in orders a year ago when France launched a program for five FTI intermediate frigates worth €3.8 billion. The government would have paid a down payment at the start of the program.
The orders in the first half included a contract signed in May for the fifth boat in the Barracuda class of submarines, as well as initial logistical support and obsolescence handling for the planned six-strong fleet, a company spokesman said. That fifth boat is named Rubis, which is also the name of the French Navy’s present fleet of nuclear-powered attack submarines, which will be replaced by the Barracuda.
Other orders included work on the firing system and cybersecurity on the FREMM multimission frigate as well as modification of the La Fayette light frigate, both sailed by the French Navy.
The first six months also included the third part of the 2016 design and mobilization contract for Australia’s future submarine, covering feasibility studies until the end of September.
Net-attributable profit for 2018 will rise by 10 percent and operating profit will continue to rise, the Naval Group said. “Throughout the 2018 reporting period, Naval Group will pursue its initiative to continuously improve the competitiveness of its offers and current programs, both in France and on international markets, driven in particular by the control of costs and lead times,” the company noted.
In the first half of the year, Naval Group launched the Normandie frigate, the latest FREMM warship; conducted three test launches in the F21 heavy torpedo program; and delivered subsections of the first Scorpene attack submarine for local assembly in Brazil.
Naval Group is engaged in a number of export campaigns, including bidding against ThyssenKrupp Marine Systems and Saab in Poland’s planned purchase of three attack submarines as part of its Orka program.
The French company submitted with Italian partner Fincantieri a controversial bid in Canada’s competition for its Canadian Surface Combatant warship program, filing the offer directly to the Canadian National Defence Ministry rather than the Public Services and Procurement Canada office.
Naval Group has since held talks with Canadian authorities, and the company is confident its offer will be considered, François Dupont, Naval Group’s international business director, said June 14. That joint offer is based on the hull and propulsion of the Italian version of the FREMM warship and the Setis combat management system from Naval Group.
The Barracuda program is running some two years late, and the first-of-class boat, named Suffren, is due to be delivered next year for entry into service in 2020.
Thales holds a 35 percent stake in Naval Group, with the French state owning most of the remaining shares.