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SPACE LOSSES HIT EADS Q3

06 Nov 03. EADS (Paris:EAD.PA – News) posted a third-quarter net loss and a sharp fall in core profits on Thursday, hit by a drop in jet deliveries at its plane-making unit and persistent weakness in its space business.

Europe’s largest aerospace firm recorded a net loss of €58m ($66.5m) in the quarter, (2002: (€68m)), and a 19 percent drop in closely watched earnings before interest and taxes (EBIT) to €192m.

The figures were above the expectations of analysts, who had projected a third-quarter net loss of €105m and EBIT of 176 million. But the stronger performance appeared largely due to a sharp rise in earnings from “headquarters consolidation”, which a company spokesman said amounted to a combination of cost cuts and a change in the way EADS consolidated its stake in French corporate and combat jetmaker Dassault Aviation (Paris:AVMD.PA – News). Core earnings from headquarters rose to €101m, (2002: €13m).

Airbus, which accounts for virtually all of EADS profits, delivered 50 jets in the third quarter of 2003 compared with 59 in the year-ago period as SARS-stricken Asian airlines pushed back delivery dates. That pushed core earnings at the Toulouse-based plane maker down 60 percent to 80 million euros in the quarter. In the fourth quarter, Airbus deliveries and profits are expected to bounce back significantly, enabling the company to meet its delivery target of 300 jets for 2003 and best U.S. rival Boeing (NYSE:BA – News) for the first time in their three decades of fierce competition.

“Total deliveries for the full year remain solidly targeted at 300,” the
company said. EADS also reiterated its targets for EBIT of €1.4bn in 2003 and a return to breakeven in its space division next year. In the third quarter, the space division slumped to a loss of €53m at EBIT level.

Despite ongoing weakness in the civil aerospace market, EADS stock has risen more than 75 percent since the start of the year, fuelled in recent weeks by key contract wins and the strong third-quarter results of Boeing. That compares with a 17 percent rise in the shares of Boeing over the same period and a 25 percent increase in the DJ Stoxx European industrials index (Zurich:^SXNP – News).

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