EADS turns in greatly improved year
By Kieran Daly
Airbus parent EADS has reported a €1.6 billion ($2 billion) profit for 2008, reversing its 2007 loss, but conceded substantial uncertainty related to the military A400M project.
Revenues rose 11% to 43 billion euros of which Airbus contributed €27 billion, up 9%. The Airbus 2008 figures do not include military work.
Earnings before interest and tax (EBIT) leaped from little better than break-even in 2007 to €2.8 billion, and net cash reached a new high of €9.2 billion. Airbus' EBIT was €1.8 billion compared with the 2007 €880 million loss.
The Airbus performance was driven by higher volumes and a more favourable product mix but, says EADS, suffered from adverse dollar effects and price deterioration.
EADS warns of a lack of "visibility" in the second half of 2009 and is forecasting roughly flat revenues for the year. It also warns: "Revised industrial plans to complete the A400M programme could lead to a significant charge, weighing on EBIT."
It says the 2008 EBIT impact from the A400M was €704 million but that the 2009 effect will become clear only when the position related to the engines and mission-critical systems is "firmly determined" or NATO procurement agency OCCAR's response to EADS' proposals is known.
Pre-delivery payments theoretically vulnerable now total €5.7 billion, but EADS describes termination of the project as "very unlikely" according to its own assessment.
CEO Louis Gallois says: "We have achieved a number of significant accomplishments. The group achieved a solid EBIT and an outstanding cash performance. We made significant headway in reshaping the company.
"Even if the A400M required enormous attention, the group has regained stability in 2008 and is proving to be resilient in the face of the turbulent global economic environment. 2009 will be a very challenging year for our industry but we can rely on an extremely motivated workforce and an excellent portfolio of products.
"Thanks to our large and well diversified order book, 2009 deliveries should remain at high levels and will give us room for manoeuvre. Cash protection is key."
