Latecoere Extends Timeframe to Merge With Aerospace Partner

Latecoere SA pushed back its goal of merging with another aerospace company to gain critical mass after the French manufacturer restructured its debt (LAT) and as production increases by customers buoy earnings prospects.

Latecoere, which sells doors, wiring and engineering services to all major airframe makers, had been seeking an investor or a combination with another aerospace supplier by the end of 2011. That’s now a goal “in two or three years,” Francois Bertrand, chief executive officer of the Toulouse, France-based company, said today in an interview.

The company agreed with banks in December to refinance 96 percent of its bank debt and 60 percent of its convertible bonds, relieving pressure to find a partner quickly. Latecoere predicts that sales will increase 10 percent this year, from 520.6 million euros ($689 million) in 2011, the CEO said.

“We invested a lot in new aircraft programs between 2000 and 2005, and now all these programs are coming to serial production, generating greater activity now and in the future,” Bertrand said.

From 2000 through 2005, the company spent about 30 percent of annual revenue on developing new technologies for planes including Boeing Co.’s 787, which began flying commercially late last year, and the Airbus (EAD) A350, which will enter service in 2014, the CEO said.

Airbus, Embraer

In a presentation today following earnings announced late yesterday, Latecoere said it will have “durable growth” on increased production rates for Airbus A320, A330 and A380 planes, as well as contracts to supply Embraer SA’s 170 and 190 models, and Boeing’s 787.

The manufacturer’s full-year profit fell 78 percent to 6.6 million euros from 29.9 million euros after it revised the value of financial hedging instruments, it said yesterday. Current operating profit rose 63 percent to 44.7 million euros as sales increased in all three divisions, which are aerostructures, wiring and engineering.

Latecoere declined 4.5 percent to 11.65 euros as of 5:10 p.m. in Paris, paring the stock’s gain this year to 23 percent.

Debt as of December 2011 was 368.8 million euros, up 18 million euros, of which 7 million euros was linked to delayed deliveries by planemakers until the first half of 2012, Latecoere said.

The French company gets 49 percent of sales from Airbus, a unit of European Aeronautic, Defence & Space Co. It gets 16 percent from Brazilian regional-jet maker Embraer, 16 percent from Chicago-based Boeing and 10 percent from Dassault Aviation. About 11 percent comes from planemakers including Montreal-based Bombardier Inc.

To contact the reporter on this story: Andrea Rothman in Paris at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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