Finmeccanica lifts orders, cash guidance on Eurofighter deal

MILAN (Reuters) - Italian aerospace and defence group Finmeccanica raised its 2016 forecasts for orders and cash flow on Thursday, helped by a multi-billion-euro Eurofighter contract, but its shares fell as quarterly results missed some traders' expectations. The stock dropped around 3.5 percent to a three-week low of 10.61 euros, with traders saying revenues and core profits for the first three months of the year fell short of hopes. The state-controlled group posted a 4.5 percent rise in first-quarter earnings before interest, taxes and amortisation (EBITA) to 164 million euros (129 million pounds), while sales fell 4.4 percent to 2.54 billion euros. Analysts' average forecast for sales was 2.76 billion euros, according to Thomson Reuters I/B/E/S. Orders for 2016 are now expected at around 20 billion euros from 12.2-12.7 billion euros previously, the company said in a statement. Guidance for core earnings and sales was confirmed. Sealed in April, the 8 billion-euro deal to provide 28 jets to Kuwait is Finmeccanica's largest ever commercial agreement, according to CEO Mauro Moretti. Moretti said Finmeccanica's share of the contract was worth over half of the overall deal value. Though revenues from contract are unlikely to arrive before 2018-2020, a significant down-payment in the second quarter of the year will boost the group's cash flow and help reduce debt. "The effect of the advance will entail an improvement of the cash flow of about 600 million euros in 2016/2017, of which approximately 200 million in the first year," the company said. The group's free operating cash flow is seen at 500-600 million euros this year, up from 307 million last year. Net debt is expected to fall to 2.8 billion euros by the end of 2016 from 3.3 billion euros a year earlier and 4.2 billion euros at the end of March, it added. Moretti, who was appointed CEO in May 2014, launched a radical overhaul of the group aimed at cutting costs, slashing debt and reorganising the company, also through the disposal of non-core assets. (Reporting by Giulia Segreti; Additional reporting by Danilo Masoni; Editing by Mark Potter)