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Enjoying excellent visibility in a high-demand market, LISI AEROSPACE saw record order levels from its main customers in 2007, notable amongst which were Boeing who placed 1413 orders in 2007, as compared with 1044 in 2006, and Airbus, who ordered 1341 aircraft over the last year.
All aircraft manufacturers (including Embraer and Bombardier) and aerospace parts manufacturers are concerned about the increased workflow resulting from these programs and the availability of parts, and, more specifically, fasteners. With a book to bill ratio of 1.20, capacity and staffing levels are steadily increasing. This will continue into 2008, in line with the SKYLINE 2010 plan, which forecasts a 40 % increase in capacity between 2006 and 2009.
LISI AEROSPACE business in Europe really picked up during the final quarter of 2007 (+ 10 %), particularly with Airbus. It remained dynamic in the US (+ 44.5 %), led by supply to the Boeing 787 assembly lines. LISI AEROSPACE thus achieved an annual sales revenue of over $150m for 2007, mainly in the aerospace sector. Despite the sharp drop in the value of the dollar over the financial year, business in the US made a strong contribution to divisional sales revenue, which was €355.7m, an increase of 20.2 % on a like-for-like basis and at average exchange rates.
European manufacturing sites adapted their businesses to accommodate the Airbus’ Power 8 restructuring plan, relying on shared skills across sites, which meant production could be transferred from the US to Europe. The Engines and Critical BU saw sustained growth, with the outlook across the whole of Europe remaining positive.
The financial year 2007 also saw the birth of the new LISI MEDICAL division, following three acquisitions during this period, contributing €9.3m to sales revenue. This consolidation impact was neutralized by the sale of Eurofast in May 2007.
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To keep pace with its aerospace customers’ growth, during this period LISI AEROSPACE increased its staffing levels, increased production capacity and modernized its industrial processes for the third year running. The latter did not affect the division’s profitability, as the operational profit margins reached 19.3 % of sales revenue, compared with 19.1 % in 2006. The Canadian site has continued to increase production levels following their plan, with annual sales revenue of €7.5m and with levels remaining stable for the last quarter. The new LISI MEDICAL entity, which comprises three units acquired during the year only made a small contribution to LISI AEROSPACE’s operating profit.
The sale of Eurofast resulted in a net capital gain of €11.1m. Net income therefore reached a record €56.4m, compared with €38.8m, i.e. an increase of 45.4 %.
Total investments (€18.1m) remain high, in line with the development plan. This program essentially involves increasing production capacity, improving production capacity and extending some manufacturing sites, in particular those in Saint-Ouen l’Aumône (France), Torrance (USA) and Canada.
Despite the numerous investments recorded for the period and strong business growth, LISI AEROSPACE generated a free cash flow of €31.1m, as compared with €27.8m, i.e. an increase of 11.8 %.
Confidence in the 2008 outlook
In 2008, based on manufacturing forecasts, LISI AEROSPACE is expecting another year of growth following the efforts made since 2006 towards increasing capacity. The division is also expecting further news on wider development, based on Boeing qualifications in Europe, and development of the B787 and A350 programs. With the number of firm orders booked by the LISI AEROSPACE division, the order book remains very solid for 2008, especially in the USA. The only area of concern is the continual delays to the B787 schedule. The division nevertheless has confirmed its Skyline 2010 plan with a considerable increase in investments from 2008 onwards.
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