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EADS AND THALES RESULTS IN LINE WITH EXPECTATIONS

12 May 04. EADS posted sharply higher first quarter profits Wednesday on higher sales and Airbus plane deliveries, and promised solid growth for 2004.EADS, Europe’s largest aerospace company, posted a net profit of €49m ($58m), (2003: €28m). The year-ago figure had been revised from the previously
posted €93m loss, reflecting a change in accounting methods.

Sales rose 9 percent to €6.03bn ($7.16bn) in the first three months of 2004, the company said. Airbus contributed €4.13bin ($4.90bn) in sales, a 9 percent gain. However, the value of new orders booked during the period fell 37 percent to €3.41bn ($4.05bn), the company said.

“The first quarter results confirm our targets for this year,” joint CEOs Philippe Camus and Rainer Hertrich in a statement. Camus and Hertrich also voiced confidence in the company’s medium-term growth prospects through 2005, citing “further improvements in the civil aviation market.”

EADS is forecasting earnings of €1.8bn ($2.1bn) in 2004, before interest, tax, depreciation and amortization, (2003: €1.54bn)

The space division, which is forecast to break even this year after three years of heavy losses, reduced its operating losses in the first three months from €21m to €11m.

On 11th May Thales announced that revenues in Q1 2004 were €1,941m, a decline of 1.7%, (2003; Q1 2003 €1,975m). On a like for like basis, revenues increased by 1.5%. The changes in the scope of consolidation had a net impact of -€54m and the fluctuation in exchange rates had a limited impact of -€9m.

The change in the scope of consolidation is mainly due to the deconsolidation of Thales Geosolutions (as of Q4 2003).
The changes in consolidated sales per activity were:

The 14.5% organic decrease in aerospace revenues is due to the timing of revenues linked to the percentage of completion of certain military contracts and to the decline in sales of civil simulators (the number of civil simulators delivered in Q1 2003 was particularly high). The decrease is also explained by the ongoing downturn in the civil air traffic management business. The short term variation observed in Q1 2004 does not affect the prospects for growth in aerospace as a whole over the full year.

On a like for like basis, sales in information technology and services increased by 7.8%. Whilst market conditions remained weak in microelectronics and broadcast activities, elsewhere, the overall positive trend confirms the growth recorded at the end of 2003 in secure operations, the dynamism in positioning activities and the renewed growth in information systems revenues.

The geographic destination of sales remained virtually the same, with a slight increase in sales in France and the United Kingdom, which represented 27% (24 % in Q1 2003) and 15% (14% in Q1 2003) respectively. Sales outside Europe accounted for 38% of consolidated revenues (42% in Q1 2003), with the Asia & Pacific region once again representing an important 14% of sales.

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