EADS Profit Rises as Order Book Grows

30.07.2008 (17:21) | Internaitional Herald Tribune

European Aeronautic Defense & Space, the parent of Airbus, said Wednesday that its second-quarter earnings rose as it sold more planes and cut costs across the business.

Net profit in the April-June period rose 46 percent from a year earlier, to €118 million, or $184 million, the company said. Revenue rose 5 percent to €9.9 billion. The company registered "a remarkable order intake," considering the economic conditions, it said.

Profit was hurt by a €715 million charge related to delays in the A380 superjumbo program, which followed a review of the business in May. Analysts polled by Reuters had on average forecast net profit of €342 million.

Once the charge is factored out, the results beat market expectation, Markus Turnwald, an analyst at DZBank, wrote to clients.

The company predicted that 2008 revenue would exceed €40 billion, with about 470 aircraft deliveries for the full year. It also said it was comfortable with its full-year target of €1.8 billion in earnings before interest and taxes.

EADS said that its order intake in the first half of 2008 was €51.2 billion. Its order book was at a record €354.2 billion at the end of June, not including orders for 247 aircraft received during the recent Farnborough air show. It said the growth was achieved despite a €17 billion reduction in the order book, resulting from a revaluation caused by the dollar's weakness. Airbus sells its planes for dollars, while many of its costs are billed in euros.

The company said it had sold 245 Airbus planes in the first half, including four A380s, up from 231 aircraft in the first half of 2007. It also reported increased sales at its Eurocopter, Astrium and Defense & Security businesses.

EADS shares, which have lost more than 45 percent of their value over the last 12 months, fell 3.2 percent in Paris afternoon trading Wednesday.

"To maintain competitiveness, EADS has to tackle the ongoing U.S. dollar weakness," Louis Gallois, the EADS chief executive said in a conference call with analysts. "Beyond the successfully running Power8 initiative, we are launching Power8 Plus aiming at an additional €1 billion savings and efficiency improvement in the years following 2010."

The Power8 program calls for 10,000 job cuts and reductions in supply costs. He said every division of the company would be working to cut costs. He also said that the company did not anticipate any new charges on the A380 program.

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