AIRBUS parent European Aeronautic, Defence & Space Co said yesterday that it returned to profit in the first quarter as the plane maker increased deliveries and the company cut costs.
EADS rose 8.8 percent in Paris trading after posting net income of 285 million euros (US$441 million), or 35 cents a share, versus a year-earlier loss of 10 million euros, or 1 cent.
Airbus delivered a record 48 planes in March after increasing output of the single-aisle A320 series and the wide-body A330. That helped Paris and Munich-based EADS lift its operating margin to 7.8 percent from 1 percent. Chief Executive Officer Louis Gallois pledged yesterday to move more jobs abroad after the US dollar's biggest quarterly drop against the euro in almost four years limited gains from sales in the greenback, Bloomberg News said.
"It's a strong result as all the divisions did better than expected, Airbus in particular," said Yan Derocles at Oddo Securities, who has a "buy" rating on the shares. EADS had an accounting gain of about 250 million euros from currency hedges.
Airbus is part-way through a reorganization that aims to cut 5 billion euros from cash spending before 2010 and 2.1 billion euros from annual costs after that. The plan includes 10,000 job cuts, and Gallois said he'll need to deepen savings by moving more production to lower-cost economies following the US currency's recent trend.
Earnings before interest and tax, excluding goodwill and one-time gains or costs, rose to 769 million euros from 88 million euros amid improvements at all divisions and a decline in reorganization costs, EADS said. Currency effects reduced the figure by 360 million euros. EADS reiterated its 2008 forecast of 1.8 billion euros in adjusted Ebit.
At the Airbus division, sales increased to 7.06 billion euros from 6.6 billion euros, driven by higher volumes and revenue recognition on the A400M military transport. While the planes haven't been delivered yet, Airbus's government customers make payments on the planes with each technical hurdle that's cleared. The plane is set for test flight in July or August.
Profit has been held back by the decline of the US dollar, the currency of plane-industry contracts worldwide, against the euro, in which the company accrues most of its costs. The US currency lost 8.2 percent versus the euro in the quarter.
Airbus accounts for two-thirds of EADS's revenue, a proportion the company aims to reduce to 50 percent by 2020 by building up defense work and other operations. Airbus's loss last year widened to 881 million euros from 572 million euros on delays to the A380 and A400M and redesigns of the A350, a model that will compete with Boeing Co's 787 Dreamliner. That pushed EADS to its first full-year loss in five years.