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2015: DCNS reaches its financial goals, executes its roadmap, and deploys its Progress Plan

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Naval Industry News - France
 
 
 
2015: DCNS reaches its financial goals, executes its roadmap, and deploys its Progress Plan
 
Key points:
• Consolidated Group Results 2015:
o Earnings €3.04bn.
o Orders intake for €3.52bn (of which €1.3bn on international markets), with a book-to-bill amount of €1.15bn.
o Order book: €12.26bn.
o Positive net results of €58.4 million.

These results can be explained by:
o The positive effects of an exceptional short-term savings plan;
o The industrial transformation with, in particular, the initial effects of the reorganisation of the industrial construction activities and fleet maintenance services;
o The execution of the programmes and the pursuit of an active commercial policy:
» Sale to Egypt of a FREMM multi-mission frigate and two LHDs, along with multiannual maintenance contracts;
» Continued placement of orders for fleet maintenance and modernisation representing more than €2bn;
» Slight progression of profit margin on orders.

Hervé Guillou, Chairman and Chief Executive Officer of DNCS, declared: “Our teams are mobilised more than ever to ensure the operational availability of the French Navy’s vessels in accordance with the foreseen calendar and performance levels. Furthermore, we are pursuing with determination our improvement efforts to generate the profit marginsnecessary to finance the development of our core business, abroad and in energy.”
     
Hervé Guillou, Chairman and Chief Executive Officer of DNCS, declared: “Our teams are mobilised more than ever to ensure the operational availability of the French Navy’s vessels in accordance with the foreseen calendar and performance levels. Furthermore, we are pursuing with determination our improvement efforts to generate the profit marginsnecessary to finance the development of our core business, abroad and in energy.”
Egyptian Navy FREMM built by DCNS
     
Stabilised earnings
The Group’s earnings stabilised at €3.039bn for the 2015 reporting period, comparable to the earnings for the 2014 reporting period. This is supported by international sales, which, exceptionally, represented half of the 2015 earnings as a result of the very rapid delivery of the FREMM frigate to Egypt, and by the Brazil and India submarine programmes as well as the Malaysia surface-vessel programme. The remaining income comes from major French national programmes, essentially the FREMM and Barracuda programmes, and the service activities which alone represent more than €1bn.

Maintenance of brisk order taking
Order taking has remained brisk in 2015, with a book-to-bill amount of €1.15bn, which can be consideredprecursor to a return to profitable growth. Orders stand at €3.52bn, with notable contributions from the sale of a multi-mission frigate (FREMM) to Egypt and, for an amount of over €2bn, numerous contracts won by the Services activity. The total order book amount is €12.26bn, which represents 4 years’ worth of earnings.

Positive net result
After suffering heavy losses in 2014, DCNS has returned to balanced figures in 2015, with a positive net result of €58.4 million. This return to profitability is partly the result of exceptional measures – savings plan, sale of a FREMM multi-mission frigate to Egypt and the first effects of the Progress Plan and the transformation of the industrial management of programmes as well as the improvement of competitiveness. This positive result is partially offset by losses suffered on the Jules Horowitz nuclear reactor programme, for which DCNS negotiated an amicable exit with CEA at the end of 2015.

Sustained investments
DCNS has re-started its investments and R&D activities to support its new product policy (in particular for export markets), improve industrial performance and develop new competencies.

DCNS invested close to 10% of earningsin R&D, of which 3% was self-financed, placing the Group above European naval shipyards.
     
Hervé Guillou, Chairman and Chief Executive Officer of DNCS, declared: “Our teams are mobilised more than ever to ensure the operational availability of the French Navy’s vessels in accordance with the foreseen calendar and performance levels. Furthermore, we are pursuing with determination our improvement efforts to generate the profit marginsnecessary to finance the development of our core business, abroad and in energy.”
Barracuda class SSN built by DCNS
     
Amongst the main investments, the following are particularly noteworthy:
• Launch of new submarine and surface-vessel products;
• Development of air-independent propulsion (AIP) technologies intended for submarines;
• Development of studies in marine renewable energy (MRE);
• Regrouping on DCNS sites:
o 1,000 engineers and technicians in Ollioules (southeast France)to constitute one of the largest software laboratories in Europe;
o 150 DCNS Research employees in the new Technocampus Ocean facilities, located in Bouguenais (western France), near Nantes and dedicated to the incubation and acceleration of its innovations;
o Almost 400 employees in Le Froutven near Brest to participate in the development of marine renewable energy activities;
• The deployment of OPTI, a new data system for the optimised integrated management of programme costs and schedules, the deployment of a project to improve the management of industrial flows, and the acquisition of the 3DEXPERIENCE platform from Dassault Systèmes to manage the entire lifecycle of future DCNS naval products and systems.
     
Hervé Guillou, Chairman and Chief Executive Officer of DNCS, declared: “Our teams are mobilised more than ever to ensure the operational availability of the French Navy’s vessels in accordance with the foreseen calendar and performance levels. Furthermore, we are pursuing with determination our improvement efforts to generate the profit marginsnecessary to finance the development of our core business, abroad and in energy.”
OpenHydro tidal turbine built by DCNS
     
Goals for 2016:
By implementing its Strategic Action Plan and the Progress Plan, DCNS must make a durable return to profitable growth. The priorities for 2016 are focused on competitiveness and efficient programme execution:
• Finalisation and implementation of the Global Performance Agreement;
• Winning of a major naval defence export contract, in particular in Australia, which will require sustained effort throughout the year;
• Contractualisation of the new Intermediate-Size Frigate (FTI) programme and the SSBN maintenance programme;
• Delivery of the Languedoc multi-mission frigate (FREMM) to OCCAr, intended for the French Navy, transfer of Le Suffren, the 1st Barracuda-class nuclear attack submarine (SSN), onto its launch system for vessel finalisation, preparation of the major technical shutdownof theCharles de Gaulle aircraft carrier, pursuit of the IAM51 ROH adaptation for the SSBN Le Triomphantand start of that for the SSBN Le Téméraire;
• Commissioning of the first Indian submarine, transfer of the two LHDs to the Egyptian flag, maintenance of the Saudi Arabian frigates and the Malaysian submarines, delivery of strategic equipment for the Brazilian submarine programme;
• Connection to the power grid of the demonstrator tidal-turbine farms in France (Paimpol-Bréhat) and Canada (Bay of Fundy).

In conclusion, in 2016, DCNS should see a slight growth in its earnings and continue to improve its operating income and operating profitability. Net results should rise by 10 to 15% in comparison to 2015.