...Stabilisation of Outlook: The revision of the Outlook in May 2015 reflects Fitch Ratings' forecast improvement in credit metrics to levels in line with its expectations for the rating, as a result of disposals and restructuring efforts. The disposal of underperforming units also reduces the risk of volatile earnings or unforeseen cash drain. Nevertheless, rating headroom remains low, and the failure of performance to improve in line with our expectations may result in a downgrade. Operating Performance Improving: 2014 performance showed an improvement over the prior year. The funds from operations (FFO) margin improved to 8.8% from 6.6% in 2013, primarily due to improvements in the European Defence Electronics and Transportation divisions. Free cash flow (FCF) was again negative (-EUR212m, from -EUR395m in 2013), partly as a result of a large working-capital outflow. Fitch expects the FFO margin to remain around 9% as pressure in defence markets offsets improvements from restructuring efforts....
