Troubled Zodiac sees profits again affected by continued production delays

Just under a year ago Zodiac Aerospace was facing an operating income shortfall of 44.6% for the financial year 2014/2015 as a result of production delays at its aircraft seat division. In November 2015, Zodiac were in arrears on 500 packs, approximately 1500 seats. Despite American Airlines taking legal action against Zodiac Aerospace and subsequently cancelling part of their contract with the company, a positive approach was still being adopted. In particular, the implementation of what was called Focus, an 18-month transformation plan, was intended to reorganize the company, strengthen industrial operations and reorganize the production process. Forecasts for operational profits for the company were 10% for the 2015/2016 fiscal year and 12% for the year following. This was anticipated through reorganizing management, addressing a lack of engineers and improving supply chain weaknesses.
This week Zodiac have announced that it is going to take longer than the hoped for 18 months for Focus to be fully implemented, and as a consequence the company has warned that its operating profit is likely to remain unchanged compared to last year. Currently seat delay numbers are running at 300 packs (approximately 900 seats).
In a statement, Zodiac confirmed that: “The group anticipates current operating income for the 2015/2016 financial year to come in close to that of 2014/2015.” Last year’s operating income was EUR313.8 million, with an operating margin of 6.4%. Zodiac also confirmed that sales in its second financial quarter were up 5.4% at EUR1.25 billion (USD$1.39 billion), and sales for the first financial half were up 7.1% on a reported basis, at EUR2.488.5 billion: this was down 1.8% on a like-for-like basis.
Having been of interest back in 2011 to Safran, a major French aerospace group, when asked if the company was open to a buyout, its chief executive, Olivier Zarrouati, told reporters an open mind was being kept: “Our history has been to be quite receptive to anything reasonable being said to us. In the past we had been in a situation where we had to protect the interest of our shareholders but we stay very analytic and business-oriented people.”