EADS Eyes Higher 2012 Profit On Airbus Surge
July 29, 2011
EADS, whose Airbus unit has outpaced US rival Boeing in the battle for plane orders so far this year, forecast a significant rise in operating profit next year as demand for aircraft grows.
EADS predicted Airbus would sell more than 1,000 planes in 2011, helped by a decision to revamp its single-aisle A320 series to use less fuel that gave it a head start over Boeing in the best-selling jet segment.
The group posted forecast-beating second-quarter results on Friday, as did Boeing two days earlier, and raised its free cash flow target for the year to around EUR€1 billion (USD$1.43 billion), excluding spending on acquisitions.
EADS said it still expected 2011 operating profit before one-offs to remain stable year-on-year at around EUR€1.3 billion. Earnings per share could lag or exceed last year's depending on the euro's strength against the dollar.
But for 2012, the group expects a "significant improvement" in its earnings before interest and tax and one-offs thanks to "higher volume, better pricing and improvement of A380 performance at Airbus," EADS added.
"They are rather confident on the level of orders, so they are raising their free cash flow target quite considerably," Oddo analyst Yan Derocles said. EADS said it had net cash of EUR€11 billion as of June 30.
EADS generates around 70 percent of sales at its Airbus division, with the rest fairly evenly split between its helicopter, space and military businesses. EADS is chipping away at its cash pile to fund acquisitions as it looks to rebalance its portfolio and reduce its exposure to the euro.
The group said quarterly earnings before interest and tax (EBIT) rose 15 percent to EUR€371 million in the three months to June 30, while sales rose 6 percent to EUR€12.1 billion.
"Our results for the first half of 2011 mirror the strong demand in the commercial aviation sector," chief executive Louis Gallois said.
NARROW-BODY BATTLE
Airbus showed that a bet on a re-engined version of its A320 family, known as the A320neo, had paid off as it picked up hundreds of orders for the aircraft at last month's Paris Air Show.
Boeing had wanted to take more time to weigh whether to put more fuel-efficient engines on its competing 737 or whether to redesign it.
But after Airbus's air show wins and when loyal Boeing customer American Airlines threatened to give an entire narrow-body order to Airbus, Boeing bowed to pressure and opted for a re-engined 737.
Airbus still won a large chunk of the American Airlines order, giving it a major boost in the US market as carriers prepare to replace older fleets.
EADS said Airbus should deliver 520 to 530 aircraft this year, including around 25 A380 superjumbos, helping revenue exceed last year's level.
Boeing this week trimmed its delivery forecast slightly to 485-495 commercial aircraft from 485-500.
Plane makers receive down payments when orders are confirmed but airlines hand over the bulk of the price on delivery.
EADS predicted Airbus would sell more than 1,000 planes in 2011, helped by a decision to revamp its single-aisle A320 series to use less fuel that gave it a head start over Boeing in the best-selling jet segment.
The group posted forecast-beating second-quarter results on Friday, as did Boeing two days earlier, and raised its free cash flow target for the year to around EUR€1 billion (USD$1.43 billion), excluding spending on acquisitions.
EADS said it still expected 2011 operating profit before one-offs to remain stable year-on-year at around EUR€1.3 billion. Earnings per share could lag or exceed last year's depending on the euro's strength against the dollar.
But for 2012, the group expects a "significant improvement" in its earnings before interest and tax and one-offs thanks to "higher volume, better pricing and improvement of A380 performance at Airbus," EADS added.
"They are rather confident on the level of orders, so they are raising their free cash flow target quite considerably," Oddo analyst Yan Derocles said. EADS said it had net cash of EUR€11 billion as of June 30.
EADS generates around 70 percent of sales at its Airbus division, with the rest fairly evenly split between its helicopter, space and military businesses. EADS is chipping away at its cash pile to fund acquisitions as it looks to rebalance its portfolio and reduce its exposure to the euro.
The group said quarterly earnings before interest and tax (EBIT) rose 15 percent to EUR€371 million in the three months to June 30, while sales rose 6 percent to EUR€12.1 billion.
"Our results for the first half of 2011 mirror the strong demand in the commercial aviation sector," chief executive Louis Gallois said.
NARROW-BODY BATTLE
Airbus showed that a bet on a re-engined version of its A320 family, known as the A320neo, had paid off as it picked up hundreds of orders for the aircraft at last month's Paris Air Show.
Boeing had wanted to take more time to weigh whether to put more fuel-efficient engines on its competing 737 or whether to redesign it.
But after Airbus's air show wins and when loyal Boeing customer American Airlines threatened to give an entire narrow-body order to Airbus, Boeing bowed to pressure and opted for a re-engined 737.
Airbus still won a large chunk of the American Airlines order, giving it a major boost in the US market as carriers prepare to replace older fleets.
EADS said Airbus should deliver 520 to 530 aircraft this year, including around 25 A380 superjumbos, helping revenue exceed last year's level.
Boeing this week trimmed its delivery forecast slightly to 485-495 commercial aircraft from 485-500.
Plane makers receive down payments when orders are confirmed but airlines hand over the bulk of the price on delivery.
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