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11 Mar 08. EADS (stock exchange symbol: EAD) delivered a strong business performance in 2007 while experiencing significant challenges. The Group’s order intake, at record heights, doubled compared to the previous year and the EBIT* reached break-even, as was indicated in EADS’ revised guidance. For 2008, the Group targets an EBIT* of €1.8bn.

MarketWatch commented that EADS posted net income of €259m ($401m) compared with a loss of €768m in the year-earlier period. Revenue fell 5% to €11.36bn, hurt by weak aircraft pricing at Airbus.

Earnings before interest and taxes of €395m fell short of analysts’ forecasts. EADS blamed the miss on new charges for its A350 XWB program and pricing deterioration. In a conference call with analysts, EADS Chief Executive Louis Gallois called the EBIT results “unsatisfactory.” EADS shares ended 6.8% lower to 16.10 euros – meaning the stock has lost all of its gains from winning a Pentagon contract for air tankers. See Europe Markets.

Delays on several Airbus programs — including the A380 superjumbo, the A350 XWB
wide-body and the A400M military transport aircraft — combined with a weaker
U.S. dollar and significant restructuring costs to wipe out profit at EADS in

On an annual basis, the company posted a loss of €446m. Yet Gallois believes the company has turned a corner. “We are cautious by nature, but I feel EADS is establishing a firm footing on higher ground,” he said in a statement.

“2007 was a tough year with many high profile challenges to be overcome.
The whole of EADS has shown strength and dedication in tackling these challenges and while there is still a lot of work to be done in order to regain the full trust of our investors and customers we have made a lot of progress. We have implemented a simplified governance structure and maintained high levels of investment in research and technology. The focus on efficiency and changes from Power8 are a precondition for continued investment in EADS’ future,” said EADS CEO Louis Gallois. “EADS refuels for future success and is taking definite steps to deliver against the ambitious goals of Vision 2020. We have fixed a lot of issues, and our cash situation allows us flexibility in the face of global economic challenges. We are cautious by nature, but I feel EADS is establishing a firm footing on higher ground.”

While the Power8 restructuring programme registered initial savings, Airbus mastered a further ramp-up in aircraft deliveries, especially for the A320 Family. Two A380s are currently in service with Singapore Airlines. Eurocopter continued its increase in serial helicopter production and service business. EADS Astrium raised Ariane 5 production rate, benefited from growth in Paradigm services and achieved a technological success seeing the Columbus space laboratory integrated in the International Space Station ISS. Operational improvements in the Defence & Security Division came from both Military Air Systems and Defence and Communication Systems.

Revenues stood at €39.1bn (FY 2006: €39.4bn), supported by higher commercial aircraft deliveries at Airbus (453 units versus 434 compared to the previous year), as well as increased volumes at Eurocopter and EADS Astrium. Despite an unfavourable US Dollar impact and a decrease in A400M revenue recognition. Group revenues remained roughly stable in comparison with the previous year. EADS achieved 55 percent of its revenues outside Europe due to strong contributions from Asia-Pacific (23 percent), North America (20 percent) and other regions
(12 percent). EADS’ EBIT* (pre goodwill and exceptionals) for 2007 stood at €52m
compared to €399m in 2006. The EBIT* was strongly burdened by a Group-wide A400M charge (reflecting programme delays of 6 to 12 months) and by Power8 restructuring and A350 XWB charges. EBIT* suffered from a negative impact of the weak US Dollar. Maturing of less attractive hedges than in 2006 was more th

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