04 Nov 04. The FT reported that EADS raised its full year forecast on Thursday after the aerospace company, which has benefited from increased Airbus deliveries, reported higher third quarter profits.
The European defence and civil aviation giant beat analysts expectations with a net profit of €210m ($268m) for the third quarter of 2004, compared with €65m a year earlier. Sales rose 26 per cent to €6.9bn.
Philippe Camus and Rainer Hertrich, the Franco-German company’s chief executive officers, said in a statement that the company had been bolstered by the increase of Airbus deliveries to 224 aircraft compared with 199 the year before.
“They allow for an improved performance outlook for 2004 and beyond. EADS’ solid financial performance and our market strength enhance the potential for future growth in Asia, North America and Europe.” They said EADS, which last year over took Boeing to become the world’s biggest supplier of large passenger planes, had good reason to increase its 2004 target for earnings before interest and taxes, goodwill amortisation and exceptional items from €2.1bn to €2.2bn. It also expects sales of €32bn in 2004 rather than €31bn.
“Technology development, vigilant cost control and a highly committed international management team provide us with a competitive platform to strongly grow the business in the upturn,” the company said.
The defence and homeland security business also performed well, benefiting from a number of developments, including new contracts to build Eurocopters for the US homeland security market. Sales at the division rose 3 per cent in the quarter to €1.1bn.
However, EADS will have some obstacles to overcome if it is to continue its strong growth, not least the risk of losing a £13bn deal to equip Britain’s air force with a new refuelling aircraft.
Financial details;
* Nine months EBIT* of € 1.5bn – nearly doubled
* Strong Net Income of € 597m – more than doubled
* Net Cash position robust at € 2.8bn
* 2004 EBIT* target at € 2.2bn
* CEOs: “Sound Airbus results and Space turnaround are basis for improved EADS performance outlook for 2004 and beyond.”
In the first nine months of 2004 the company achieved an EBIT* (pre-goodwill and exceptionals) of € 1,500 million, 91 percent higher than in the same period of 2003 (€ 784 million). Driven by stronger Airbus aircraft deliveries and Space turnaround, EADS’ EBIT* margin has gone up from 4.2 to 7 percent. EADS published its nine months results on Thursday.
Growth in all EADS divisions boosted revenues by 16 percent to € 21.5bn (9/2003: € 18.5bn), in particular the increase of Airbus deliveries to 224 aircraft (9/2003: 199). Revenues of the defence and homeland security businesses grew year over year, however, they typically are strongest towards the end of the year. Free Cash Flow before customer financing strongly improved to €147m (€ – 92m) and customer financing gross exposure was slightly reduced.
Reflecting market demand improvement in civil aviation, EADS now expects Airbus to deliver at least 315 aircraft in 2004. EADS has increased its 2004 EBIT* target to € 2.2bn, up from the previous target of
€ 2.1bn.