2013 was a year of strong growth for Patria. There was a clear improvement in net sales and profitability remained on a good level. Growth in new orders was however moderate, which will affect Patria’s development over the next few years.
New orders and order stock in 2013
The value of new orders received during the 2013 financial year was EUR 623,1 million (EUR 432.4 million in 2012). Defence material and maintenance accounted for 91% (85%) and civilian products for 9% (15%) of the new orders. At the end of the year, the value of orders received by the Group stood at EUR 998.2 million (EUR 1,229.9 million).
Several notable factors contributed to the company's revenue and profit generation. The Croatian vehicle project deliveries were completed, the Swedish order for Patria's AMV vehicles entered into delivery phase and the favourable development continued at Millog Oy. Also other businesses progressed as planned, such as the the Rauma-class missile boat upgrade, AMOS mortar project, the vehicle projects in Poland and the agreement with South Africa, the Hornet Mid Life Upgrade 2 (MLU2) programme and cockpit and avionics upgrades to the Hawk Mk66 aircraft. Operations of Nammo AS, of which Patria owns 50% of shares, also showed once again positive development. In 2013 Nammo’s net sales totalled EUR 470.7 million (EUR 443.7 million), and its profitability was good.
Net sales and profitability
Patria Group’s net sales for 2013 totalled EUR 824.8 million (EUR 736.1 million in 2012), up by 12%. Defence solutions and their lifecycle business accounted for 91% (91%) and civilian products for 9% (9%) of net sales, while 65% (59%) of net sales were accrued from abroad.
The Group’s operating profit was EUR 97.1 million, representing 11.8% of net sales (2012: EUR 87.0 million, 11.8%). Consolidated income before taxes amounted to EUR 93.6 million (EUR 84.6 million), and the Group’s return on equity was 21.9% (23.1%).
Responsibility and transparency in operations
Corporate responsibility is an integral part of all Patria operations, activities and decision making. Patria adheres to Aerospace and Defence Industries Association of Europe (ASD) Common Industry Standards (CIS). During the financial period Patria joined the United Nations Global Compact and is committed to its principles. In 2013 Patria also became member of national responsibility network, FIBS. Ethics in Patria means compliance with laws and regulations as well as prevention, detection and investigation of identified risks. Patria has zero tolerance for corruption.
As for the ongoing legal processes related to certain of Patria’s export projects, the Court of Appeal of Turku confirmed the previous dismissal of all bribery charges by the District court, related to the Egyptian artillery export project (1998–2004). In January 2014, The District Court of Kanta-Häme dismissed all bribery charges related to the Slovenian export project. The State Prosecutor has appealed against the verdict. The Croatian court proceedings are estimated to commence in May 2014.
The decline of the military spending in domestic and international market will start taking effect on Patria’s operations during the financial period 2014. The Group’s net sales for 2014 are estimated to decrease compared to year 2013.
The numeric comparison between financial years will as of 1.1.2014 see a major change as the Nammo Group, owned 50/50 by Patria and the Norwegian state will be reclassified as joint venture and consolidated using the equity method in the future instead of the proportionate method (line by line). This will have a material impact on the illustration of the Group’s consolidated net sales.
Due to changes in the structure of the order and project base, profitability is estimated to decrease compared to year 2013. Overall Patria’s operations will continue stable. The domestic market military spending will be reduced, however the ongoing lifecycle update projects are proceeding according to plan and will stabilize Patria’s operations. The development in order stock depends on the ongoing export projects that are in the tendering phase. Patria’s target is to increase its scope of the outsourced operations of the Finnish customer. The operations will be developed to be more cost-effective and flexible in preparation for the continuous changes in the operating environment.
The annual general meeting of Patria Oyj will be held on 7 April 2014, where after the Annual Review for 2013 will be available on Patria’s website www.patria.fi.
For further information, please contact:
Birgitta Selonen, Vice President, Corporate Communications, tel. +358 40 869 2043, email@example.com
Patria is a trusted provider of defence, security and aviation life cycle support services and technology solutions. Patria is owned by the State of Finland (73.2%) and EADS European Aeronautic Defence and Space Company N.V. (Airbus Group) (26.8%).