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Eurocopter warns of falling orders in 2009

Eurocopter grew its turnover and operating profit in 2008, but orders are expected to fall sharply in 2009, chief executive Lutz Bertling has warned.

Consolidated turnover rose 7.5% to €4.5 billion ($5.8 billon), with helicopter deliveries rising by 100 units to 588. Helicopter production accounted for 55% of turnover and services for 32%. Breaking turnover down by market, civil and 'para-public' activity generated 55% of the total, and military activity 45%. Export business was in the ascendant, generating 65% of revenue, with France, Germany and Spain - 'domestic' customers - generating the rest.

Net orders fell just over 10%, from 802 helicopters in 2007 to 715 in 2008. However the value of new orders dropped nearly 25%, from €6.6 billion to €4.9 billion.

Speaking at the results briefing, Bertling estimated that there had been 30 "real" order cancellations in 2008, with a further 10-12 arising from "cleaning of the books" - that is, removal of old orders for which the customers are not expected to muster further down payments.

A decline in the number of military campaigns meant that military orders account for just 36% of total bookings. However, the 2008 bookings figure does not include contracts signed by Brazil and France in late December, for 50 EC725s and 22 NH90s respectively, as these contracts were not yet "effective" at year end.

Citing stock market rules, Bertling declined to disclose Eurocopter's operating result for 2008. However, he said that he was "satisfied with the increase" in operating profit, which in 2007 totalled €217 million.

While noting that forecasts must be treated with caution "at these times", Bertling suggested that 450 bookings was a "reachable" target for 2008. He added that total production would be "in the same ballpark" as last year, and put it in a range of 550 to 580 helicopters.

Eurocopter's order backlog at the end of 2008 totalled €14 billion or 1,550 helicopters. Government orders account for 71% of the backlog, and "should not face a major impact" from the global economic crisis, said Bertling. The impact on 'support' business, which accounts for 11% of the backlog, is expected to be "very limited", but the commercial backlog (18%) is more exposed. Bertling confirmed that "some" additional cancellations and postponement requests were expected ("not a wave") as well as fewer orders.

In line with broader EADS policy Eurocopter intends to "manage cash carefully" in 2009. However, it is prepared to support customers in accessing export credit financing through residual value guarantees and does not rule out provision of direct financing. The company will also increase research and development spending by 25% in 2009, following a 40% increase in 2008.

Bertling also promised the launch of three major product upgrades and predevelopment of a new helicopter, though he was not prepared to provide specifics.

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