EADS holds up during crisis
With revenues slightly up at € 29.7 billion, EADS reported an EBIT of € 1.7 billion for the first nine months, but this was weighed down to 1.1 billion Euro due mainly to foreign exchange effects. The order intake of € 24.6 billion mirrors the present slowdown in the commercial segment.
EADS’ order book of more than € 378 billion provides a solid platform for continued deliveries in the future. The Net Cash Position stands at € 8.1 billion and strengthens the Group’s position in a volatile economic environment.
“Given the challenging commercial market situation, EADS’ nine months results demonstrate the Group’s resilience in the economic crisis so far. Protecting our cash and managing the order book and deliveries – these business priorities served us well this year. I am particularly satisfied that we received the go-ahead from our customers for the Eurofighter Tranche 3a,” said Louis Gallois, CEO of EADS. “New programmes require our utmost attention. Regarding A400M, we are working with our customers to reach an acceptable solution for all parties and to put this programme on a solid long-term footing. Additionally, the A380 programme is still a matter of concern; industrial and financial reviews are underway.”
The Group achieved a Net Income of € 291 million (9m 2008: € 1,082 million), or earnings per share of € 0.36 (earnings per share 9m 2008: € 1.34). It was weighed down by the deterioration of EBIT and foreign exchange revaluations impacting the finance result. In total, when compared to 2008, the combination of hedging and revaluation effects resulted in a negative impact of € 1.7 billion on the net income before tax.
With regard to the A400M programme, negotiations with the customer OCCAR and the launch nations, which are ongoing, enter the difficult last phase. As previously reported, the current phase of negotiations provides an opportunity for all parties involved to realign the programme. This period gives room to rebase the contract on realistic conditions acceptable to all parties. EADS intends to reduce any further potential loss, but the full financial consequences of the delays will only be known once the negotiations are finalised.
From an economic standpoint, the continuous weakening of the Dollar – although not an immediate threat in the short term thanks to the Group’s long-term hedging policy and cost-cutting initiatives – is challenging EADS’ performance because of a weakening hedge book over time. The long-term Dollar level is an important driver for EADS’ earnings power over the coming years.