EADS Reports $1.01 Billion Loss in 4Q
EADS Reports $1.01 Billion Loss in 4Q Weaker Dollar, Delays at Airbus Unit Drag Down EADS ‘06 Profits; Company Lost $1.01B in 4Q By MATT MOORE The Associated Press
MUNICH, Germany - A weaker dollar and major delays at its Airbus unit dragged annual profit down at EADS NV, the company said Friday, as it posted a multimillion euro fourth quarter loss and warned that Airbus would “display another substantial loss in 2007.”
The Amsterdam-based company lost euro768 million ($1.01 billion) in the fourth quarter compared with a profit of euro405 million a year earlier. Sales, however, were up 11 percent to euro11.96 billion ($15.73 billion) compared with euro10.76 billion in 2005.
The European Aeronautic Defence & Space Co. said the effects of a series of management and financial crises, including a two-year delay to Airbus’ double-decker A380 superjumbo that has wiped more than euro5 billion ($6.58 billion) off profit forecasts, and charges at the plane maker’s A350 XWB program hurt fourth-quarter profits.
Adding to that were higher research and development costs, the company said.
Officially launched in December, the euro11.6 billion ($15.26 billion) A350XWB program promises better fuel-efficiency and greater use of composites than the earlier version of the plane, but with later availability.
So far, Finland’s Finnair has agreed to order nine of the planes and Airbus is in talks with other airlines about converting 93 outstanding A350 orders for the widebody model.
But the new Airbus jet is five years behind its rival, Boeing Co.’s 787 “Dreamliner,” which has already notched up 464 firm orders as the U.S. company prepares to begin building the plane in the second quarter, with the first flight scheduled for August.
Airbus posted a fourth-quarter operating loss of euro1.72 billion ($2.26 billion) compared with a euro453 million operating profit in the same period a year ago. During the fourth quarter EADS bought BAE Systems PLC’s 20 percent stake in Airbus for euro2.75 billion ($3.62 billion).
Sales rose 8 percent to euro6.6 billion ($8.68 billion) compared with euro6.14 billion in 2005.
For the year, Airbus, based in Toulouse, France, had an operating loss of euro572 million ($752.29 million) compared with a profit of euro2.3 billion in 2005. Sales rose 14 percent to euro25.2 billion ($33.14 billion) compared with euro22.2 billion in 2005.
Overall, EADS earned euro99 million ($130.2 million) in 2006 compared with euro1.67 billion in 2005 as sales rose 15.4 percent to euro39.4 billion ($51.82 billion) from euro34.2 billion a year earlier. Analysts polled by Dow Jones Newswires had expected a 2006 net profit of euro39 million ($51.29 million).
Co-chief executives Tom Enders and Louis Gallois said that the results were hampered by Airbus, but predicted the recently announced Power8 restructuring plan, would help return the unit to profitability.
“It will take some time but Power8 will make Airbus substantially more integrated and efficient,” the pair said in a statement. “For 2007, our priorities are to drive operational improvements, restore the group’s credibility and build a leaner and more dynamic EADS.”
Airbus plans to cut 10,000 jobs and spin off or close six of its European manufacturing plants, under the auspices of the Power8 plan, which was unveiled Feb. 28.
Three sites making wing and fuselage parts in Britain, France and Germany are earmarked for sale to new investment partners as Airbus follows in Boeing’s footsteps by seeking risk-sharing partners to finance more of its programs.
Airbus has said potential investment partners include Britain’s GKN PLC, Italy’s Finmeccanica SpA and U.S.-based Spirit AeroSystems Holdings Inc. a former Boeing division that was renamed after its sale to investment firm Onex and remains a major Boeing supplier.
Looking ahead this year, the company said it expects a single-digit increase in revenue and said that Airbus revenues would likely remain stable based on an expected 440 to 450 deliveries this year.
Shares of EADS closed Thursday up nearly 1 percent to euro23.59 ($31.03) in Paris trading.
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