Finmeccanica outlines DRS boost to profit

By Eleanor Wason and Deepa Babington

LONDON/ROME (Reuters) - Italian aerospace and defence company Finmeccanica (SIFI.MI) forecast on Thursday a boost to profit from its purchase of U.S. firm DRS Technologies Inc. and said its businesses were shielded from market turmoil.

The company estimated the DRS DRS.N deal agreed in May could boost annual revenue by between 600 million euros and 1 billion euros ($937.2 million to $1.56 billion) by 2013, and lift earnings before interest, taxes and amortisation by between 70 million and 120 million euros.

Finmeccanica, which reported a 68 percent rise in first-half net profit on Wednesday, also reassured analysts at a results presentation that cuts in defence budgets due to an economic slowdown would only affect it indirectly over the long term.

DRS CEO Mark Newman also sought to play down concerns his company could suffer from a cut in U.S. defence spending if Democratic presidential candidate Barack Obama wins in November.

"We see a strong (U.S. defence) budget going forward no matter who wins," Newman told analysts, predicting moderate 3-6 percent spending hikes.

Shares of Finmeccanica (SIFI.MI) have slumped 14 percent this year, hit partly by fears of defence budget cuts due to a slowing global economy and jitters over turmoil in financial markets. They still outperformed the pan-European aerospace and defence sector, which slid 24 percent in the period.

Finmeccanica Chief Financial Officer Alessandro Pansa acknowledged the company's shares had been hit by market volatility but said its business had been unaffected and confirmed its financial targets.

TURBULENCE

"Today Finmeccanica is not being affected very much by the turbulence in the financial market," Pansa said.

"When we talk about our business, we are what we were. What we have told in the past to you is what we'll do in the future, our guidance remains the same."

He also forecast revenues of between 17.5-18.3 billion euros and EBITA of 1.57-1.69 billion euros in 2009 including DRS, saying the combined company would benefit from integrating some product lines, combining some research and development units and cutting centralised costs.

He said the net impact of higher oil prices and demand would benefit Finmeccanica by boosting demand for its ATR Turboprop aircraft and power generation unit. It would also positively impact development of railways over the long term, he said.

The company also said it had begun the initial public offering process to sell part of its Ansaldo Energia unit. It has selected the legal advisers and global coordinators, who include J.P. Morgan, Morgan Stanley, Mediobanca and Intesa Sanpaolo.

Finmeccanica is aiming for an IPO in the fourth quarter but the plans could slip to the first quarter next year, a company executive said after the analyst meeting.

Finmeccanica has previously said it would likely sell about 60 percent of the unit to help fund its purchase of DRS and could launch the offering in the second half of the year.