MILAN (Reuters) - Italian aerospace and defense group Leonardo (LDOF.MI) said on Wednesday it would take a lead role in a 3 billion euro ($3.71 billion) helicopter deal Qatar’s Ministry of Defence signed in a bid to modernize its military fleet.
The contract is the biggest deal state-controlled Leonardo has signed since Chief Executive Alessandro Profumo took charge in May last year and embarked on ambitious expansion plans.
The deal is also an important step forward for Leonardo’s helicopter business, which weighed on the group’s results, forcing it to cut 2017 revenue and profit guidance in November.
The Qatar contract is with the NHI consortium, which includes Airbus’ (AIR.PA) and Leonardo’s helicopter divisions and Dutch aircraft manufacturer Fokker, which respectively hold 62.5 percent, 32 percent and 5.5 percent of the consortium.
Under the deal, the consortium will supply 28 medium sized twin-engine NH90 military helicopters in its two variants - for land and naval missions-, and for support, maintenance and training services, Leonardo said in a statement.
It also said that a further 12 units could be added to the deal and that the first deliveries would be before June 2022 and would continue through to 2025.
“Today’s announcement represents an extraordinary result in one of the key sectors of the company,” Profumo said in the statement. “We are strongly committed to reinforcing our market positioning, in line with the 2018-2022 industrial plan.”
In its 2018-2022 plan, published in January, Leonardo said it expected orders to grow more than 6 percent per year.
The company’s performance has been further hit in the past few years by falling oil prices, a slowdown in emerging markets and cuts in state defense budgets which has dampened demand for military equipment.
Leonardo did not specify what proceeds it would get from the Qatar contract. But the deal is likely to help Leonardo with its bid to return to double-digit profitability by 2020, half-way through its five year plan.
A source close to the matter said the returns from the contract would not be divided according to the three companies’ holdings in the NHI consortium.
($1 = 0.8077 euros)
Reporting by Giulia Segreti. Editing by Jane Merriman