TERMA: Annual report for the 2018/2019 fiscal year - New F-35 contracts

2019-05-26: New F-35 contracts to Terma. Order intake for the 2018/19 fiscal year was 1,726 MDKK. Revenue for the fiscal year was 1,803 MDKK.

Order backlog, year-end: 2.3 DKK billion

Revenue: 1.8 DKK billion

94% of the revenue is generated by international customers

Earnings (before special items): 95 DKK billion

Net increase of 97 new employees.

The order intake for the 2018/19 fiscal year was 1,726 MDKK. The order intake is considered satisfactory, but some new contracts were secured so late in the fiscal year that it had an adverse effect on the revenue and thereby on the earnings before tax.

Revenue for the fiscal year was 1,803 MDKK compared to 1,785 MDKK in 2017/18. Earnings before tax (EBT) were 95 MDKK before special items in 2018/19, compared to 124 MDKK in 2017/18. The cash flow from operating activities was 362 MDKK which is an increase compared to the year before.

Special items comprise accruals for an ongoing court dispute in Poland. The Regional Court of Warsaw delivered its judgment in October 2018 with the result that both parties (the Polish Ministry of National Defence and Terma) have appealed to the Court of Appeal. The dispute concerns a contract entered into in 2010 with the Polish Ministry of National Defence regarding Aircraft Survivability Equipment for helicopters.

”So far, the court dispute has confirmed that our system delivered the expected performance, and we believe that we have a strong case, but with a significant litigation risk,” says President & CEO Jens Maaløe.

94% of Terma’s revenue is generated outside Denmark, and the global market looks promising:

"We have secured a large contract for command and control systems as well as radar systems with the Indonesian Navy with good opportunities for additional tasks. In addition, we have a constructive dialog with the U.S. Air Force on new technology within self-protection for aircraft, an area where we already hold a solid position, both in the U.S. market and in a number of other countries,” says Jens Maaløe.

The U.S. is Terma’s most important market, but both Europe and Asia Pacific have also developed positively during the past year.

”Our security-cleared subsidiary in the U.S. has facilitated a number of unique opportunities where we can apply our deep technological know-how from Denmark for projects in the U.S., which would otherwise have been out of our reach,” says Jens Maaløe.

New contracts for the coming years’ production of aerostructures and electronics for the F-35 program ensure continued growth in the plants in Grenaa and Lystrup. Due to concentrated and targeted efforts to expand the capacity and at the same time increase efficiency, the F-35 program is developing profitably and competitively:

“Our extensive investments in innovation, production technology, employee development, and streamlining of processes is bearing fruit. Our targeted focus on the F-35 program is today a significant part of Terma's overall business, and we receive high recognition from customers and the F-35 program management for our on-time and high-quality deliveries,” says Jens Maaløe and continues:

”This year, we reached a total staff of 450 employees in Grenaa, and when the program reaches full-rate production during the following years with production of up to 190 aircraft per year, there will be approx. 550 employees in Grenaa. For comparison, Denmark has acquired a total of 27 aircraft. Our production plants in both Grenaa and Lystrup are continuously being expanded but are basically already geared for full-rate production.”

During the fiscal year, Terma has had a net increase of 97 new employees, and at year-end, total staff was 1,495 Full-Time Employees.

Jens Maaløe will retire at the end of May 2019 after 16 years as President & CEO of the Terma Group.

On 1 June 2019 Jes Munk Hansen takes up the post as CEO of the Terma Group. Before joining Terma, he was CEO for Osram USA and Head of the Osram Global Sales Function. During 2015-2017, he was CEO of the OSRAM company Ledvance. Before joining Osram, Jes Munk Hansen served 13 years in Grundfos. In 2008, he became President and CEO of Grundfos North America. Jes Munk Hansen holds a Master of Science in Forestry from Copenhagen University and an MBA from London Business School.

In connection with the Annual General Meeting on Friday, 24 May 2019, Christina Grumstrup Sørensen will leave the Board of Terma A/S. She has been a member for five years. After this, the external members of the Terma Board of Directors are: Flemming H. Tomdrup (Chairman), Jørgen Huno Rasmussen (Deputy Chairman), Carsten Dilling, and Karen-Marie Katholm. The employee representatives are: Bo Laursen, Martin Anders Hedegaard, and Benny Daugaard Laursen.

The Annual Report covers the period 1 March 2018 – 28 February 2019.

View source version on TERMA: https://www.terma.com/press/news-2019/annual-report-for-the-201819-fiscal-year/