Refile: UPDATE 1-Latecoere sees new contract costs reducing 2019 profits

Latecoere SA

05/12/2018 18:25

(Refiles to add slug for newswire clients)
    Dec 5 (Reuters) - French aerospace equipment maker Latecoere
 LAEP.PA  cut its 2019 earnings outlook on Wednesday, saying
additional start-up costs related to new contracts would
temporarily weigh on margins and cash flow.
    Group Chief Executive Yannick Assouad said in a statement
that the size of new contracts won by its Interconnection
Systems division, from Thales  TCFP.PA  among others, required
additional capacity and would thus generate "material" start-up
costs.
    "Seizing these opportunities will grow our market share but
will impact the division's profitability in 2019," she said. 
    The division produces wiring systems and harnesses.   
    The group as a whole now expects a low single-digit
recurring operating margin and a negative 2019 free cash flow.
However, the contracts are expected to make a positive
contribution to margins in following years.
    At its Aerostructures division, which supplies fuselages and
doors to Airbus  AIR.PA  and Boeing  BA.N , Latecoere sees some
of the cost reductions originally planned for 2019 now occurring
one year later. That is in part due to having to bring some
activities back in house after the loss of a key supplier.
    Latecoere previously expected 2019 earnings and free cash
flow to be comparable to 2017, when its adjusted recurring
operating income grew 6.7 percent to 51.1 million euros ($58
million) and its free cash flow was 29.4 million euros.
    That forecast was already revised downwards in September
from a "profitability level and cash generation above 2017
levels", announced in March.  urn:newsml:reuters.com:*:nW8N1KI007 urn:newsml:reuters.com:*:nFWN1VR05S
    The company confirmed its targets for 2018, with revenues
seen in line with 2017 excluding currency effects, and the
second-half recurring margin to be better than in the
first-half.
    Latecoere added that it expected 2019 organic revenue growth
to be "significant", excluding currency effects.
($1 = 0.8811 euros)

 (Reporting by Piotr Lipinski in Gdynia
Editing by Susan Fenton and Kirsten Donovan)
 ((piotr.lipinski@thomsonreuters.com; +48 58 772 00 86;))