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Shares in Finmeccanica sank to their lowest level in more than 13 years on Tuesday after the Italian industrial conglomerate said it would plunge into loss this year and would not pay a final dividend.
The forecast that it would make a €200m ($270m) loss before interest, tax, depreciation and amortisation marked an about turn from the company’s previous prediction that it would be profitable this year.
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“When I said that in July I was at a certain moment of my analysis,” said Giuseppe Orsi, Finmeccanica’s chief executive, of his earlier prediction. “Today I have unfortunately had to revisit [that prediction].”
Shares in Finmeccanica closed down more than 20 per cent on Tuesday. The company’s shares have lost 56 per cent of their value since the beginning of 2011 and are down by 84 per cent since their peak in 2007.
The revision of the forecast came as the festering schism at the top of Finmeccanica broke out into the open. Pier Francesco Guarguaglini, the group’s former chief executive and current chairman, refused to chair the board’s meeting on Monday due to his opposition to Mr Orsi’s restructuring plans.
Finmeccanica’s business in energy defence systems, defence electronics and helicopters remain profitable. However, the group has been dragged down by its unprofitable transport and aeronautics divisions.
The aeronautics division took a €753m charge for the nine-month period, partly due to its business with Boeing and “non-conformities” in some products that Finmeccanica supplied to the company. The transport division, focused on rail equipment, has been hit by delays in expected orders in Italy and cost over-runs on foreign contracts.
During the nine months to the end of September, the company made a net loss of €767m on €12.3bn in revenues, compared to net profit of €321m on revenues of €12.9bn for the same period last year.
The group announced on Tuesday plans to sell off roughly €1bn in assets between now and the end of 2012 in an effort to cut its net debt of €4.7bn.
The company has already announced a restructuring programme for the aerospace business involving 1,000 job losses, and it is now beginning to restructure AnsaldoBreda, which makes trams, trains and metro carriages. Both businesses should be restructured by the end of 2013
Finmeccanica said that concurrent to AnsaldoBreda’s restructuring, it would also consider selling more than 50 per cent of the company to an industrial partner, and possibly parts of Ansaldo STS, which makes rail signalling equipment.
The restructuring plan has heightened tension between Mr Orsi, who became chief executive in May, and his predecessor Pier Francesco Guarguaglini, who refused to attend Monday’s board meeting.
Mr Guarguaglini and Marina Grossi, his wife, who is the head of the group’s Selex Sistemi Integrati subsidiary, are among several Finmeccanica executives under investigation by the Italian authorities. They deny any wrongdoing and have not been charged
“I think he may have had some different opinion on a few parts of the plan and he decided not to come,” said Mr Orsi, who added that he did not feel his relationship with Mr Guarguaglini was awkward. “I’m not uncomfortable, I can assure you,” he said.
“Yesterday I went to the board with my plan. He (Guarguaglini) was not there, but the plan was approved unanimously, including by the representative of the Italian Treasury.”
Finmeccanica is still 30 per cent owned by the Italian state, which makes restructuring and potential job losses in Italy especially politically sensitive.
It also led the company to pursue business deals in Libya, following former prime minister Silvio Berlusconi’s drive for closer business ties with Muammer Gaddafi. These deals have been put on ice by the toppling of the dictator but the company remains confident that they will eventually proceed.