March 27, 2017 / 2:30 PM / 10 months ago

UPDATE 1-France's Latecoere expects higher 2017 profits despite slowing business

(Adds CEO, analyst comments)

By Alan Charlish

March 27 (Reuters) - French aerospace equipment maker Latecoere expects recurring operating profits to increase this year, as restructuring measures offset a likely fall in revenue.

The company said on Monday that it expected revenue to decline by around six percent in 2017 at constant exchange rates and based on forecasts by its clients, but nevertheless predicted a slight increase in recurring operating profits.

Shares in Latecoere, which supplies fuselages, doors and electrical wiring systems to aircraft manufacturers, were down 3.2 percent by 1340 GMT.

Midcap Partners’ analyst Gilbert Ferrand, who has a “neutral” rating on the stock, said the company’s guidance for a drop in revenue this year had taken some analysts by surprise.

Chief Executive Yannick Assouad told Reuters by telephone that the decrease in business would be felt in the company’s aerostructures segment in the second half of 2017 due to decreasing production of Dassault Aviation’s Falcon 7x and 8x as well as the Airbus A380.

However, Assouad said the transfer of production of some cabling in Latecoere’s interconnection systems business to Mexico, Morocco and Tunisia, as well as the transfer of production of Boeing 787 doors to Mexico would allow the company to post a slight increase in recurring operating profit in 2017.

Latecoere more than doubled its recurring operating profit for 2016, as it benefited from currency effects, decreasing assembly times for the Airbus A350 plane and lower unit costs in aerostructure programmes.

The company reported recurring operating income of 47.9 million euros ($52 million), more than two and a half times higher than the 2015 figure, which was restated to take account of the sale of the company’s services unit in December.

$1 = 0.9211 euros Reporting by Alan Charlish in Gdynia; Editing by Sudip Kar-Gupta and Susan Fenton

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