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LOWER CIVIL SALES DRAG DOWN EADS

10 Feb 03. European aerospace group EADS (XETRA:EAD.DE – News) said on Monday it had slightly beaten its goal for operating profit of €1.4bn in 2002 while sales had fallen three percent to €29.9BN.

Last year’s orders totalled €31bn($33.6bn), down 49 percent from 2001 due to sharply lower demand from airlines for the group’s Airbus jets, the company said. EADS added that it had net cash of over €1bn at the end of 2002, slightly above its own expectations.

“Due to ongoing restructuring and cost-reduction efforts, we are totally dedicated to the maintenance of solid margins,” said its co-chief executives, Philippe Camus and Rainer Hertrich in a statement.

EADS owns 80 percent of Airbus and consolidates the jetmaker at 100 percent in its accounts. Airbus said last month that any conflict in Iraq was likely to hurt its markets further, perhaps compromising its target to deliver 300 jets in 2003.

The 2002 sales figures were in line with consensus forecasts. Analysts had expected the company to post annual revenues of €29.8bn. Airbus sales made up 65 percent of total revenues in 2002, slipping five percent on the year to €19.5bn.

Elsewhere, the company’s aeronautics division saw revenues rise five percent to €5.3bn , while space division sales fell nine percent to €2.2bn.

The company’s defence and civil systems unit posted broadly stable sales of €3.3bn, while the military transport aircraft division saw sales slip four percent to €524m.

Comment: The worst is over for EADS with these results in line with expectations. The company has rationalised its space activities with the acquisition of the BAE shareholding in Astrium which should reap revenues for the Skynet 5 programme post 2006. More importantly the company is believed to be running its slide rule over the UK services sector with VT being one to watch on the radar screen.

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