EADS sales forecasts take off

The pan-European defence/aviation/space giant has had a good year - despite spending cuts by governments.

by Emma Haslett
Last Updated: 10 Nov 2011
Given the extent of cuts made by almost every government in the eurozone, you might think the area’s largest defence manufacturer would be feeling rather sorry for itself. Not so: EADS, the defence giant which manufacturers everything from passenger planes to satellites, raised its full-year forecast for orders, revenue, profitability and free cash flow today, saying that despite hefty cuts to defence budgets, its commercial business couldn’t be going better. Well – apart from the small matter of €200m (£171m) delay to its newest aircraft...

That’s the A350 jetliner manufactured by EADS subsidiary Airbus, the launch of which it’s had to push back by another six months, thanks to problems in its supply chain. Made from lightweight composites, the plane has been mooted as Europe’s answer to the super-efficient Dreamliner 787 manufactured by US rival Boeing, the first of which were delivered earlier this year with much pomp and ceremony. The A350, by contrast, is already a year behind – and this latest delay pushes back its roll-out to 2014. Poor show.

Still: having raised its forecast for orders during 2011 from 1,000 to 1,500, EADS says it’s had an unexpectedly strong year for sales, particularly from Asia and the Middle East. So far, though, it’s been a year of two halves: in the short-term, third-quarter operating profit fell by 15%, from €378m last year, to €322m now, and revenues dropped by 4% to £10.75bn. For the first nine months as a whole, though, sales rose by 4% to €32.7bn, offsetting a 5% fall in military sales. Not bad.

Clearly, though, EADS is unwilling to put all its eggs in its commercial basket, and CEO Louis Gallois said he was ‘preparing’ to sit down with governments and discuss their ‘future procurement needs’. Which is particularly potent, given that France and Germany both own a 22.5% stake in the company (and Germany’s about to buy another 7.5% off Daimler, despite saying that it’s going to cut military orders). Although judging by the pressure on those nations’ finances, they might not hold on to that for much longer…

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