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Airbus Keeps 2014 Forecast as Deliveries Bolster Earnings

Airbus

Airbus Group NV (AIR) said third-quarter profit gained 16 percent, beating analyst expectations, as it sold more high-value aircraft and brought its A380 super-jumbo program closer to breakeven next year.

Earnings before interest and tax, goodwill impairment and exceptionals rose to 821 million euros ($1.02 billion) from 706 million euros, Toulouse, France-based Airbus said in a statement today. Sales were unchanged, while third-quarter cash flow before acquisitions reached 180 million euros, compared with negative 686 million euros a year ago.

“They were cash positive in the third quarter, nobody expected that, it shows they’ve got a lot better control of their working capital,” said Yan Derocles, an analyst at Paris-based Oddo Securities who has a “buy” on the shares.

The Airbus planemaking unit, which contributes more than two thirds of revenue and the majority of profit, received net orders for 791 aircraft in the first nine months of the year, already fulfilling its full-year target and achieving sales-to order-ratio above 1.

The stock rose as much 1.59 euros, or 3.3 percent, to 49.29 euros in Paris, and traded at 49.06 euros as of 9:18 a.m. The stock has lost 12 percent this year, putting Airbus on track for its worst annual return since 2008.

Airbus said it’s negotiating with customers of its A400M military transport to assess enhancements, with “related costs, risks and mitigation actions under assessment.”

Positive Cash

The group achieved positive cash flow in a period when it also met operational targets including certification of the A350, whose first delivery comes next month, and first flight of the A320neo. While Airbus delivered 140 planes versus 150 in the year-earlier period, the percentage of A380 deliveries was higher, with eight deliveries in the quarter, compared with six a year ago. The list price for the A380 is $414.4 million, almost twice as much as a wide-body plane and about four times that of single-aisle models.

Airbus Group, known until January as European Aeronautic, Defence & Space Co., changed its name to Airbus to benefit from the prominence of the brand in aerospace. The company combined its defense and space businesses into one unit, and an overhaul of the business is progressing according to plan, Airbus said today.

Net income for the third quarter fell 41 percent on negative foreign exchange revaluation on U.S dollar liabilities. Analysts had estimated Ebit before one-offs of 662 million euros, according to a survey by Bloomberg.

Airbus maintained its outlook for this year, including a “moderate return” on sales growth, aircraft deliveries similar to last year’s number and stable sales.

For the A400m military transport, Airbus said that even as the industrial ramp-up is proceeding, “some delays” have occurred. While customers had the right from Nov. 1 to terminate certain orders, Airbus said it judged that possibility to be “highly unlikely.” So far, four aircraft have been delivered, with first deliveries now being prepared for the U.K. and Germany.

(Source: Bloomberg)