Engineering

Rolls-Royce has partial flight plan to destination

14 Jun 2018

The UK engine maker announced plans to cut 4,600 jobs ahead of its investor day in London. The resulting cost savings are welcome. The bigger question for investors is how CEO Warren East can more than double free cash flow in under two years to hit his 1 billion pound target.

Hadas: Shrinking to greatness is next CEO trick

2 May 2018

Corporate giants like GE, Ford and Deutsche Bank are cutting back on what were once key businesses. Good luck to them. Major strategic retreats usually come too late or are poorly executed. But as global sectors become more competitive, managed decline is a good skill to learn.

Subsea 7 can still save McDermott from itself

23 Apr 2018

The Oslo-listed oil services group has lobbed in a $2 bln offer for its U.S. counterpart. Subsea 7’s bid looks low, and hinges on McDermott ditching an agreed deal with CB&I. But CB&I’s sale of Stone & Webster to Toshiba is a bad precedent, and Subsea 7 can afford to pay more.

French telco jigsaw missing key regulatory piece

17 Apr 2018

Bouygues could bid for Altice’s French business, Bloomberg reports, to end a painful price war. It’d make more sense than failed 2016 talks with state-owned Orange. But regulators may still prefer four less-profitable operators to three stronger groups with power to raise prices.

GKN turbocharges defence with $5 bln auto sale

9 Mar 2018

The besieged engineer is selling its car parts division to U.S. rival Dana for stock and cash. The price looks generous, and even allows GKN to ditch its pension liabilities. The sum of the UK group’s parts now looks well above what hostile suitor Melrose Industries can afford.

Airbus’s sunnier skies still contain clouds

15 Feb 2018

Shares in the aerospace giant jumped by one-tenth on Thursday following an 8 percent rise in operating profit, higher than analysts expected. But its operating margin still lags those of U.S. rival Boeing. Closing the gap could be complicated by a fresh stateside corruption probe.

Capita’s kitchen sink still leaves dirty linen

31 Jan 2018

The UK outsourcing group’s shares slumped 40 pct after its new CEO flagged a 700 mln pound rights issue, asset sales and scrapped its dividend. They should plug balance sheet holes. To recover Capita will need investment, and show how it differs from recently collapsed Carillion.

ThyssenKrupp takes second step to redemption

19 Jan 2018

Having pooled its steel assets with rival Tata, the German industrial group plans a further strategy shift. Just as well: margins even in the non-steel bits lag peers. The question is how far CEO Heinrich Hiesinger can follow the vogue for dismantling big, unwieldy conglomerates.

Siemens’ $48 bln health IPO has recovery potential

16 Jan 2018

The German industrial group is floating medical-tech unit Healthineers. Ageing rich-world populations should boost demand for scanning equipment and the like. If the group can sort out its sickly diagnostics division, the mooted price tag could even look cheap.

Melrose can engineer a higher price for GKN

15 Jan 2018

The acquisitive engineering group has had its 7 billion pound bid for ailing GKN rejected. It could hike its offer by over 10 percent and still double its money, according to Breakingviews estimates. That would be an acceptable return, but will require precision execution.

Wanted: Italian-American carmaker seeks new driver

29 Dec 2017

CEO Sergio Marchionne will soon head for FCA’s off ramp. A blizzard of well-timed deals helped spark stellar returns, but the group has low margins and big gaps. Marchionne also wears too many hats. Breakingviews imagines a consultant advising the board on picking his successor.

GE needs Nelson Peltz’s help – and takes it

9 Oct 2017

The $200 bln U.S. industrial giant, now with a new CEO, still seems unable to get people excited about owning its shares. A board seat for the activist investor’s top lieutenant may help. It’s a contrast with P&G, which is resisting Peltz – potentially to shareholders’ detriment.

Siemens and Alstom put European engine on track

26 Sep 2017

The German firm is merging its rail unit with its French rival. It's a deal that has long made strategic sense but stumbled over turf issues. That the two countries are pulling it off after Angela Merkel’s election setback suggests fresh steam for the continent's political unity.

Tata Steel JV pays ThyssenKrupp four dividends

20 Sep 2017

A historic joint venture with India's Tata will unshackle the German group from the fickle, capital-intensive steel industry. Lower pension liabilities, a share of synergies worth 3 bln euros and a more robust balance sheet are further benefits. Workers will fare better too.

Elliott takes activist-buyout firm fight to Japan

11 Sep 2017

The two Wall Street tribes are increasingly at odds. Now Elliott has bought into a $3 bln Hitachi unit that KKR covets, presumably seeking a better price. For private equity groups, mining Japan’s promising seam of corporate carve-outs may be about to get a little bit harder.

Rebooted UK-French software merger rewards patience

5 Sep 2017

After two botched attempts in as many years, French industrial group Schneider and UK software maker Aveva are trying to hook up again. The $3.9 bln deal is as complex as it is financially alluring. With past glitches ironed out, the merger has a good chance of becoming reality.

Marchionne’s Maserati spinoff lacks traction

15 Aug 2017

Fiat Chrysler’s boss is considering selling the group’s premium brands, according to a report. He staged a similar trick with the firm’s high-end Ferrari brand. Yet Maserati and Alfa Romeo are tiny and need Fiat’s production lines. Staying part of a larger group makes more sense.

Growing Siemens will be harder than rewiring it

11 Aug 2017

CEO Joe Kaeser has delivered higher margins and healthy shareholder returns by making the engineering behemoth slimmer and more agile in his first four years. He has four more to build on his success. The risk is he will repeat past mistakes by indulging in costly acquisitions.

Infrastructure-services merger owes Trump little

2 Aug 2017

Shares of engineer Jacobs popped when the U.S. president was elected in November. They’ve since faded along with hopes of heavy government spending. The company’s $3 bln combination with water expert CH2M may have some domestic benefits, but Jacobs’ bet looks more global.

Safran engineers itself halfway out of a hole

24 May 2017

The French engine maker has re-sculpted its offer for hapless peer Zodiac. The price has been cut by around 15 percent to $7.7 billion, and some of the original bid’s complexity is ironed out. The main unresolved issue: a bad investment now looks like a mediocre one.