EADS has seen a sharp fall in earnings for the first nine months of 2009 as foreign exchange losses weighed heavily on the European aeronautics and defence group.
For the nine months, the company’s earnings before interest and tax declined by 46 per cent to €1.089bn (A$1.743bn), while revenue increased by one per cent to €29.7bn (A$47.5bn). The small increase in revenue was attributed to strong aircraft deliveries, but was also moderated by lower revenue recognition on the A400M program.
“Given the challenging commercial market situation, EADS’s nine months results demonstrate the group’s resilience in the economic crisis so far,” said CEO Louis Gallois. “Protecting our cash and managing the order book and deliveries – these business priorities served us well this year.”
By segment, the biggest increase in EBIT came from the Astrium space division, which recorded an 11 per cent increase in EBIT to €155m (A$248m), while revenues increased by 17 per cent. Eurocopter saw its revenues increase by nine per cent, resulting in a one per cent lift in EBIT to €165m (A$264m). Airbus recorded a two per cent fall in revenue, while EBIT declined by 64 per cent to €523m (A$837m).
Gallois added that the company was particularly pleased that it has received approval from customers for the Eurofighter Tranche 3A, but noted that major programs such as the A400m and the A380 required “utmost attention”.
“Regarding A400M, we are working with our customers to reach an acceptable solution for all parties and to put this program on a solid long term footing,” he said.
EADS says it is currently in the “difficult last phase” of negotiations with launch customer OCCAR, which represents a number of European nations, to change significant terms of the A400M contract. The company also noted that it “regrets” the recent decision by the South African government to cancel its order for eight A400Ms, and has not assessed the industrial or financial impact of the cancellation.
Gallois also noted that the A380 program is “still a matter of concern”, and “industrial and financial reviews are underway”. The company noted that some aircraft due for delivery by the end of the year are likely to slip to early 2010, while a number of customers have also requested delivery delays to their A380s.
With the impacts of the A400M and A380 on the group’s bottom line not yet quantified, the company declined to offer specific profit guidance, but expects EBIT before one-off charges for the full 2009 year to be around €2bn (A$3.2bn), with revenues roughly in line with last year’s, based on an average exchange rate of €1 = US$1.39.
