EADS Takes A400M Hit but Raises 2008 Target
(NSI News Source Info) November 15, 2008: European aerospace group EADS took a new €341m charge for its delayed A400M military project on Friday but said it would exceed its full-year profit target as it posted third-quarter results above expectations.
The Airbus parent said it had swung to a quarterly operating profit, or earnings before interest and tax, of €860m compared with a €711m loss a year earlier.
EADS sales rose 6% to €9.701bn. The world's second-largest aerospace group behind Boeing reported a third-quarter net profit of €679m compared with a year-earlier loss of €776m.
Planemaker subsidiary Airbus posted a €789m operating profit on revenues of €5.859bn. Analysts had on average forecast third-quarter group EBIT of €679m on revenues of €9.234bn, including Airbus EBIT of €179m on revenues of €5.944bn, according to a Reuters poll.
Analysts had also forecast net profit of €377m.
EADS said it was well-placed to weather the financial crisis with a record €9bn in net cash, but again blamed the propulsion system that includes the engine for delays to the A400M, a €20bn European Nato troop and cargo lifter.
EADS, which last year took €1.4bn in provisions as it pushed Europe's biggest military project back by six to 12 months, on Friday announced a new third-quarter charge of €341m for the A400M and said it would face new delays.
EADS also acknowledged problems with 'equipment and systems integration', a phrase echoing problems which were blamed for two-year delays in its biggest civil project, the A380 superjumbo.
It announced an accounting change pending clarification of the A400M schedule, which boosted revenues by altering the rate at which milestone payments are recognised. Once the schedule is updated, the charges will be updated again, it said.
"EADS is more determined than ever to get this complex programme under control," chief executive Louis Gallois said in a statement.
New cost savings
EADS has clashed with a consortium of British, French and German engine makers over delays in testing the plane's engines and is in talks with buyers to try to waive delivery penalties.
France has said it is prepared to discuss a compromise but Germany has taken a tough line saying the contract must stand.
EADS said it would likely exceed its full-year EBIT forecast of €1.8bn after making €2bn in the first nine months. "This excludes any additional impact for the A400M, due to the uncertainties of the programme," it said.
EADS continued to forecast full-year revenues of over €40bn based on 470 Airbus aircraft deliveries.
It doubled its forecast for 2008 free cash flow excluding customer financing to more than €2bn ($2.50bn).
EADS forecasts continue to be based on a euro at $1.45. The European currency currently fetches around $1.27.
EADS has until recently been grappling with a weak dollar that penalises its revenues when converted back into euros.
The company said the prospect of economic slowdown overshadowed the dollar's recovery and relief from record oil prices that have severely squeezed airline customers.
It said a slower market could lead to order deferrals and cancellations, but visibility on this is limited. Airbus has already suspended increases in aircraft production.
EADS announced a new cost-saving plan on top of its Power8 restructuring programme involving 10,000 job cuts at Airbus.
The four-year Power8 plan aims to achieve €2.1bn of recurring EBIT savings at Airbus by 2010. In July EADS extended this by another €1bn for 2011-2012 and spread about a third of the extra burden across the rest of the group.
On Friday, EADS said it would seek additional savings of at least €200m in 2011-12 through further cost-savings and integration between its headquarters and divisions.
With headquarters in both Paris and Munich, EADS recently denied a report it was planning to axe its German base.
Saturday, November 15, 2008
EADS Takes A400M Hit but Raises 2008 Target
EADS Takes A400M Hit but Raises 2008 Target
(NSI News Source Info) November 15, 2008: European aerospace group EADS took a new €341m charge for its delayed A400M military project on Friday but said it would exceed its full-year profit target as it posted third-quarter results above expectations.
The Airbus parent said it had swung to a quarterly operating profit, or earnings before interest and tax, of €860m compared with a €711m loss a year earlier.
EADS sales rose 6% to €9.701bn. The world's second-largest aerospace group behind Boeing reported a third-quarter net profit of €679m compared with a year-earlier loss of €776m.
Planemaker subsidiary Airbus posted a €789m operating profit on revenues of €5.859bn. Analysts had on average forecast third-quarter group EBIT of €679m on revenues of €9.234bn, including Airbus EBIT of €179m on revenues of €5.944bn, according to a Reuters poll.
Analysts had also forecast net profit of €377m.
EADS said it was well-placed to weather the financial crisis with a record €9bn in net cash, but again blamed the propulsion system that includes the engine for delays to the A400M, a €20bn European Nato troop and cargo lifter.
EADS, which last year took €1.4bn in provisions as it pushed Europe's biggest military project back by six to 12 months, on Friday announced a new third-quarter charge of €341m for the A400M and said it would face new delays.
EADS also acknowledged problems with 'equipment and systems integration', a phrase echoing problems which were blamed for two-year delays in its biggest civil project, the A380 superjumbo.
It announced an accounting change pending clarification of the A400M schedule, which boosted revenues by altering the rate at which milestone payments are recognised. Once the schedule is updated, the charges will be updated again, it said.
"EADS is more determined than ever to get this complex programme under control," chief executive Louis Gallois said in a statement.
New cost savings
EADS has clashed with a consortium of British, French and German engine makers over delays in testing the plane's engines and is in talks with buyers to try to waive delivery penalties.
France has said it is prepared to discuss a compromise but Germany has taken a tough line saying the contract must stand.
EADS said it would likely exceed its full-year EBIT forecast of €1.8bn after making €2bn in the first nine months. "This excludes any additional impact for the A400M, due to the uncertainties of the programme," it said.
EADS continued to forecast full-year revenues of over €40bn based on 470 Airbus aircraft deliveries.
It doubled its forecast for 2008 free cash flow excluding customer financing to more than €2bn ($2.50bn).
EADS forecasts continue to be based on a euro at $1.45. The European currency currently fetches around $1.27.
EADS has until recently been grappling with a weak dollar that penalises its revenues when converted back into euros.
The company said the prospect of economic slowdown overshadowed the dollar's recovery and relief from record oil prices that have severely squeezed airline customers.
It said a slower market could lead to order deferrals and cancellations, but visibility on this is limited. Airbus has already suspended increases in aircraft production.
EADS announced a new cost-saving plan on top of its Power8 restructuring programme involving 10,000 job cuts at Airbus.
The four-year Power8 plan aims to achieve €2.1bn of recurring EBIT savings at Airbus by 2010. In July EADS extended this by another €1bn for 2011-2012 and spread about a third of the extra burden across the rest of the group.
On Friday, EADS said it would seek additional savings of at least €200m in 2011-12 through further cost-savings and integration between its headquarters and divisions.
With headquarters in both Paris and Munich, EADS recently denied a report it was planning to axe its German base.
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