Buoyant demand for Airbus airliners and the weak euro have enabled EADS (European Aeronautic Defence and Space) to declare earnings before interest and taxes (EBIT) of €553 million ($475 million) for the first half of 2000 on sales of €10.6 billion.
The strength of Airbus - in which EADS has an 80% stake - more than offsets poor performances by the Defence and Civil Systems, Military Transport Aircraft and Space divisions. Airbus delivered 93% of the company's earnings during the period but accounted for just 64% of revenues.
The EBIT and revenue figures have been calculated to reflect the combined performance of merger partners Aerospatiale, Daimler-Chrysler Aerospace and CASA, which came together as EADS in July. Comparative figures for the first half of last year are not available, but the pro-forma EBIT for the full year was €1.45 billion on revenues of €22.6 billion.
EADS says its first-half performance was on target, as second-half sales and profits are usually stronger. Orders worth €24 billion were booked over the six months, leaving the company with an €119 billion backlog at the end of June.
A €643 million charge on the former Aerospatiale left EADS with a nominal first-half net loss of €359 million. EADS claims this had "no effect on our cash position and does not reflect any change in our economic performance".
EADS co-chief executive Rainer Hertrich says the strong order book will enable the company to "generate a significant increase in revenues and earnings from 2002" and should enable it to reach its target of an 8% EBIT margin by 2004. The weak euro has provided a strong boost to EADS because much of its revenues are in dollars.
The Military Transport Aircraft division - offering the product line of the former CASA - lost €35 million on revenues of €74 million in the first half of 2000; its hopes of recovery are pinned on the pending launch of the Airbus Military Company A400M.
The Defence and Civil Systems division also ended the first half in the red, but recent missile contracts should lift its performance from 2002. Aeronautics - which includes Eurofighter, ATR and Eurocopter - was profitable as was Space, though the latter is expected to post revenues for 2000 some €100 million lower than expected, due mainly to fewer Ariane 5 launches this year. Loss-making ATR turboprop production is being cut back by 20% this year to 24 aircraft, according to Hertrich.
EADS claims that merger integration work should deliver c580 million in annual cost savings by 2004, including benefits from the creation early next year of the Airbus Integrated Company.
Source: Flight International