Systems check at Eurofighter cockpit

The recently acquired digital radio network business compensated for most of the deconsolidation incurred by the sale of the German missile business LFK. Return on Sales improved to 5.9% compared to 3.6% the year before. Furthermore, the year’s streamlining initiatives and goals were met, contributing to the efficiency gains. The Division also moved major programmes and projects into the production phase.

Revenues increased to €5.9 billion (€5.6 billion in 2005) due chiefly to increased Eurofighter ramp-up production and new digital radio network contracts. Since inception the Eurofighter GmbH consortium has delivered 114 of these high-performance, multi-role combat aircraft as of the end of 2006. Completion of the sale of the German missile business LFK to MBDA impacted the Division’s revenues (€-132 million), as LFK was 100% consolidated (MBDA consolidated 50%). EBIT has increased to €348 million (€201 million in 2005) due to operational improvement and an LFK capital gain (€111 million). Additionally, restructuring costs (€-74 million) and change of perimeter effects compensated the lower costs related to UAV (Unmanned Aerial Vehicle) development.

After acquiring LFK, MBDA has secured its position as the world’s largest missile company. MBDA received orders from the French and German defence ministries respectively for 250 SCALP naval cruise missiles and 680 PARS 3 Long-Range precision fire-and-forget weapon systems. Substantial revenue contributions came from Storm Shadow, Brimstone, Taurus, Aster and MICA moving into production phases. MEADS development is progressing.

The previous year’s restructuring initiatives improved programme performance across all Business Units – Military Air Systems (MAS), Defence and Communications Systems (DCS), Defence Electronics (DE) and MBDA. In 2006, management began concentrating the MAS activities in Manching, near Munich, and consolidating the Division’s Munich headquarters. Additionally, the Division’s French activities began concentrating in Elancourt, and MBDA has centralised its location in the Paris region.

Building capabilities in growth markets

From a strategic perspective this was a significant year, as management continued to build capabilities in future growth areas for both defence and security.

Professional Mobile Radio systems

DCS’s Professional Mobile Radio digital radio business received more than 20 orders for secure communications networks. Among these, the German public safety authorities’ BOSNet contract was the most significant.

The Division strengthened its position in coastal and maritime surveillance, in particular through the joint acquisition of Atlas Elektronik with ThyssenKrupp, and the acquisition of SOFRELOG.

Progress was made in the development of a European Advanced Unmanned Aerial Vehicles (UAV) programme. First flights were completed for the Medium Altitude Long Endurance UAV for the French government and a next-generation UAV technology demonstrator in Spain. Additionally, Germany agreed to acquire a High Altitude Long Endurance UAV.