EADS profits down 23 percent

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European aerospace group EADS reported a 23 %drop in first-half profit on the back of foreign exchange swings and lower aircraft prices, but maintained its basic outlook while raising cash flow targets.
The Airbus parent also took a fresh €71 million (R787 million) charge for the delayed A400M military plane in the second quarter but deferred radical further provisions on the project as it negotiates a new contract with purchasing countries.
First-half operating profit fell 23 % to €888 million (R9844 million) with revenues up 2 % to €20.195 billion (R221 billion). Net profits fell 6 % to 378 million, EADS said today.
Analysts had on average predicted half-year revenues of €19.437 billion (R210 billion), with operating profit of 1.063 billion and net profit of 619 million, according to Reuters Estimates.
EADS said that without harmful foreign exchange swings its operating profit would have been €1.3 billion (R14 billion), down from a comparable figure of 2.0 billion in the first half last year.
Operating profit should be positive but lower in the second half compared to the first half of 2009, it said.
EADS said negative trends had stabilised or slightly reversed but noted many airlines are still in the mire.
“There is no clear sign of stabilisation since traffic and yield deterioration, as well as funding conditions, are challenging airlines’ financials,” the aerospace group said.
EADS said Airbus deliveries should at least match last year’s record of 483 planes in 2009, and reiterated a forecast of roughly stable annual revenues based on stable deliveries and a euro at $1.39. The euro EUR= now fetches around $1.43.
It stuck to a 2009 order forecast of up to 300 planes for Airbus, even though it admits this will be tough following 90 orders in the first half, which included a busy air show.
Airbus delivered 254 aircraft in the first half of 2009, up from 245 in the same period of 2008, to stay in front of rival Boeing as the world’s largest jetliner manufacturer.
EADS took a relatively minor new provision of €71 million (R787 million) for the delayed Airbus A400M military plane in the second quarter, after 120 million in the first quarter and a total of more than 2 billion in charges so far on the troubled project.
It said it was maintaining a temporary accounting method that allows it to book charges on a hand-to-mouth basis each quarter, deferring any radical new provisions needed to stabilise the loss-making troop plane until the second half.
Buyers last week agreed to renegotiate the A400M contract.
EADS raised its free cash flow forecast, saying it would consume €1 billion (11 billion) instead of 1.5 billion after customer financing in 2009 before taking account of the A400M programme.
Rival Boeing last week topped expectations with a 17 % rise in second-quarter profit, but did not say when it`s long-delayed 787 Dream liner plane would fly.



Pic: Eads Talarion