Patria Group has reported growth in order stock primarily due to the success of its vehicle programmes.
However, delays in key delivery agreements have burdened net sales and profitability in the first half 2023. The company remains optimistic about its future, driven by ongoing strategic initiatives and multinational partnerships.
Patria Group’s strong order stock development driven by vehicle programmes
Patria Group, a defense and aerospace company, has published its interim report for the period spanning January to June 2023.
Patria Group’s net sales for the first half-year reached €321.8m, ($360.4m) showcasing substantial growth compared to €280.6m in the same period of the previous year. However, the operating profit declined to €15.8m from €19.8m, falling short of the targeted profitability.
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The equity ratio stood at 39.1%, marginally lower than the 39.8% recorded in the comparative period, and the net gearing ratio increased to 77.8% from 69.3%.
One of the primary factors influencing the net sales was the delay in the orders of new planned 6×6 vehicle programmes during the first half of the year. Additionally, despite the success of Patria’s 6×6 and 8×8 vehicle programmes, profitability remained below the target set for the first half of 2023.
Patria’s involvement in several vehicle program delivery agreements simultaneously has led to resource challenges. Nevertheless, the company’s supply chain is expected to meet its targets, enabling timely deliveries to customers throughout the remainder of the year. As a result, the outlook for net sales and profitability for the rest of 2023 remains robust.
The company’s success in 6×6 and 8×8 vehicle programmes has not only contributed to the development of its other business operations but has also facilitated the Group’s internationalization. Patria made significant progress in the negotiations for the F-35 program, and its NEMO mortar systems found a new market in Sweden.
However, it’s worth noting that while the demand and order stock are particularly high for vehicle programmes, the demand is not uniformly distributed across all of Patria’s services.
Focus on Finland’s F-35 acquisition and employee challenges
In June, Patria and Lockheed Martin signed a Memorandum of Agreement (MoA) for direct work within Finland’s F-35 industrial participation program. The MoA covers the contractual framework for F-35 forward fuselage assemblies in Finland, further solidifying the collaboration between the two companies.
Additionally, Sweden’s decision to strengthen its defense capabilities with eight new mortar vessels, equipped with Patria NEMO Navy turreted 120 mm systems, marks a milestone for Patria. This development showcases the company’s expanding influence in the international defense market.
Furthermore, Patria signed a agreement with the Finnish Defence Forces Logistics Command for 91 Patria 6×6 armored vehicles, with a purchase option for an additional 70 vehicles.
This agreement is part of the multinational Finland-led CAVS (Common Armoured Vehicle Systems) program, which involves Latvia, Sweden, and Germany. The deliveries of these vehicles are scheduled to begin in 2023, contributing to the company’s order stock.
However, Patria faced challenges in certain segments during the second quarter, necessitating change negotiations on fixed-term layoffs in its Helicopters unit, Production Support, New Production, and Diesel Engines unit.
These measures were implemented due to decreased demand in aircraft and helicopter airframe, as well as various types of motor equipment maintenance. As a result, 89 employees were affected by fixed-term full and part-time layoffs.
The ongoing negotiations concerning Finland’s acquisition of F-35 fighter jets are expected to be a focal point for the rest of the year. Patria and Lockheed Martin‘s MoA signed in June lays the groundwork for further collaboration within Finland’s F-35 industrial participation program.
Vehicle programmes propel Patria’s internationalisation
The multinational joint CAVS program for Patria’s 6×6 vehicle is on track, with deliveries of the 91 vehicles to Finland set to commence this year. Additionally, Sweden and Germany’s involvement in the program highlights its growing international significance.
Patria’s demand in the 6×6 and 8×8 vehicle programmes presents challenges in ensuring sufficient resources and efficient supply chain management. Furthermore, despite prevailing uncertainties such as the geopolitical situation, economic fluctuations, inflation, and increasing costs, Patria’s delivery capability is anticipated to remain at a high level.
In the medium and long term, the company, alongside the defense industry in Europe, is expected to witness an increase in demand due to the rising defense spending in various European countries.