EADS makes some Vision 2020 headway

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This story is sourced from Flight International
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EADS made first-half progress towards two of its "Vision 2020" rebalancing goals, but slipped further behind on its key objective of growing away from domination by its Airbus commercial airliners division.

During the first half of the year, the Eurocopter rotorcraft division completed its $647 million purchase of Canadian maintenance, repair and overhaul operator Vector Aerospace, helping EADS towards a better balance between platforms and services - and also its goal of expanding the group's footprint outside its European base.

Finance director Hans Peter Ring said the Vector deal, which closed just before the half ended, will lift services' share of Eurocopter revenue to 40-45%, from a current 30-35%.

However, as the Eurocopter business highlights, EADS is still struggling to shift its revenue balance away from Airbus by fostering growth in its other divisions.

During the half, revenue from the commercial airliners division was up by 11.5% year on year to nearly €14.5 billion ($20.7 billion), representing a solid two-thirds of group sales, up from less than 64% in same the period last year.

Meanwhile, Eurocopter revenue rose by 3%, to €2.17 billion, and its share of EADS's total slipped by half a point to below 10%.

On the profit line, however, Ring and chief executive Louis Gallois can feel better about Vision 2020's progress.

While Airbus commercial slipped back by 7% to earnings before interest and tax (EBIT) of €223 million, Eurocopter EBIT gained nearly a third, rising to €94 million.

That result came despite a challenging product mix for Eurocopter, which is seeing its Tiger and NH-90 military programmes accounting for a growing share of revenue, despite being "not the most profitable products".

Gallois praised Eurocopter management, though, for attacking their own cost-cutting plan "in a very courageous way".

Deliveries were down from the 249 helicopters achieved in the first half of 2010, though they remain high, said Gallois, at 205.

The Astrium space division gained 11% in revenue, to €2.35 billion, though EBIT edged down by 3% to €1.3 million.

First half highlights included the 44th consecutive successful Ariane 5 launch.

Airbus Military, which lost €161 million in the first half last year, recorded A400M programme revenues of €412 million this year, and turned a €3 million profit.

For the group, revenue was up by 8% to €21.9 billion, but pre-tax profit nearly halved to €155 million.

That profit margin of just 0.7% compares poorly to first half and full-year 2010 margins of 1.35% and 1.78%, respectively - levels which Gallois has stated are clearly inadequate.