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EADS PROFITS LOWER IN THIRD QUARTER

14 Nov 02. EADS said on Thursday that operating profit dropped 10% to EUR1.01bn in the first nine months of the year from EUR1.12bn a year earlier. The 80%-owner of European plane maker Airbus didn’t provide data for the third quarter, but based on the company’s figures for the first half and nine months of the year, Dow Jones Newswires estimates a third-quarter operating profit of EUR238m.

That’s above of an analysts’ consensus forecast of EUR200m, though down from EUR356m the previous year. Operating profit is the most closely watched measure of the company’s performance.

The company also confirmed financial targets for the full year but said ” enduring uncertainties” in the market mean it can only achieve its previous 2004 target of a double-digit operating margin “at a later stage”.

The company’s operating margin in the first nine months was 5.1%. In a statement, EADS said it would give guidance on its expectations for operating profit in 2003 in the first quarter next year.

“EADS has witnessed a considerable global slowdown of economic expectations in terms of gross domestic product growth and specifically a reversal of the air- traffic recovery,” the company said.

“A ‘double-dip’ crisis in commercial aerospace is made increasingly likely given the extended period of airline losses in the U.S. and overcapacity in the space segment … Consequently EADS is more cautious in its outlook for 2004.”

EADS reported a sharp slide in nine-month net profit to EUR23m from EUR2.28bn a year earlier.

The company said the discrepancy was due to “the exceptional gain coming from the creation of the integrated Airbus SAS in 2001.” Pre-goodwill amortization and exceptional items, profit dropped 23% to EUR493m from EUR638m a year earlier. Earnings per share fell to EUR0.61 from EUR0.79. Revenue for the nine months was EUR20.0bn, down from EUR20.7bn a year earlier “mainly due to low Airbus deliveries and the lower dollar-euro exchange rate.” EADS confirmed it still expects EUR30bn in revenue for 2002.

The company’s order book at end-September stood at EUR176.57bn, down 4% from EUR183.26bn last time. Order intake during the first nine months was EUR22.34bn, 53% down from EUR47.25bn a year earlier.

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