EADS reports declinging profits
EADS reported an order decline and lower profits for the first half of 2009 but claims its business base is solid. A400M is still dragging down the company.
The order intake of € 17.2 billion reflects the slowdown in the commercial sector. Revenues stood at € 20.2 billion, EBIT* before one-off at € 1.3 billion. EADS’ half-year EBIT* of € 888 million was mainly burdened by foreign exchange effects. The Net Cash Position remains solid at € 8.1 billion. Thus, in the current phase of limited economic visibility, EADS continues to be well positioned to face the crisis.
Group revenues slightly increased by 2 percent to € 20.2 billion (H1 2008: € 19.7 billion). At Airbus, deliveries remained at a high level thanks to an improved second quarter compared to previous year. Revenues were negatively impacted by foreign exchange effects and an unfavourable mix including low A380 deliveries. The Astrium Division in particular contributed to increased Group revenues.
Based on a strong Q2 EBIT – which increased by nearly 70 percent compared to previous year – EADS recorded an H1 EBIT of € 888 million (H1 2008: € 1.16 billion). The EBIT was mainly burdened by exceptional negative foreign exchange impacts. Before these exceptionals, EBITbefore one-off stood at € 1.3 billion (H1 2008: € 2.0 billion). Compared to previous year, EBIT before one-off was weighed down by price deterioration on aircraft deliveries and degradation of hedge rates, partially mitigated by volume and Power 8 savings. A380 costs are still higher than expected.
The Group achieved a Net Income of € 378 million (H1 2008: € 403 million), or earnings per share of € 0.47 (earnings per share H1 2008: € 0.50). Self-financed R&D expenses slightly increased to € 1,172 million (H1 2008: € 1,130 million). This reflects Airbus’ continuing aircraft development programmes as well as the Group’s innovative momentum.
Due to lower commercial aircraft and helicopter orders, relating to the current economic climate, the Group’s order intake decreased to € 17.2 billion (H1 2008: € 51.2 billion). Up to the end of June 2009, EADS' order book remained high at € 391 billion (year-end 2008: € 400.2 billion), including a € -4.3 billion revaluation due to the weaker US dollar at the end of June compared to end of December 2008. Orders within the commercial aircraft business are based on list prices. Robust order intake in the defence business led to a stable defence order book of € 55.2 billion (year-end 2008: € 54.9 billion). At the end of June 2009, EADS had 117,661 employees (year-end 2008: 118,349).
The customer OCCAR and the launch nations have reiterated their commitment to the A400M: On 24 July, they confirmed that they will adhere to the A400M programme to enable further detailed negotiations up to the end of year. This provides an opportunity for all parties involved to realign the programme on an achievable basis. EADS is using this phase to carry on with its suppliers and partners to establish a robust timetable including a date for the first flight. Furthermore, 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.
Over the last months, the programme made further progress. The first A400M development aircraft is being prepared for engine fitting. The second aircraft is assembled and has entered systems testing phase while final assembly for the third unit has started. The flying test bed for the engine has successfully performed twelve flights with more than 35 flight hours. A first version of the revised engine software FADEC was received and is showing good initial results in testing.