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EADS Returns To Profit  
User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3385 posts, RR: 9
Posted (5 years 5 months 2 weeks 14 hours ago) and read 2899 times:

EADS has announced that it returned to profit last year supported by record Airbus Civil deliveries and cost cutting in the form of Power8.

http://news.bbc.co.uk/1/hi/business/7934120.stm

They are boosting dividends and expect a profit in 2009 too (but this will be less than 2008).At 8:45 am GMT the shares were up 2.5% at €10.48 - amazing to think that they were around € in the summer of 2006!

18 replies: All unread, jump to last
 
User currently offlineJdevora From Spain, joined Aug 2006, 351 posts, RR: 7
Reply 1, posted (5 years 5 months 2 weeks 4 hours ago) and read 2655 times:

Official Press Release
http://www.eads.net/1024/en/pressdb/pressdb/20090310_eads_fy2008.html
Full PDF
http://eads.com/xml/content/OF00000000400004/3/92/42484923.pdf

Cheers


User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9997 posts, RR: 96
Reply 2, posted (5 years 5 months 1 week 6 days 16 hours ago) and read 2471 times:
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Quoting Jdevora (Reply 1):
Official Press Release

E2.8Bn EBIT for EADS....

E1.8Bn EBIT from Airbus (a margin of 6.7%)

And E9.2Bn net cash....

Sounds a bit better than the dire predictions made back in 2006 .....  Smile

Rgds


User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3385 posts, RR: 9
Reply 3, posted (5 years 5 months 1 week 6 days 15 hours ago) and read 2428 times:



Quoting Astuteman (Reply 2):
Sounds a bit better than the dire predictions made back in 2006

Along with the statement that they expect profits to be down this year but still be in profit - it's a good result for them given the current financial climate.


User currently offlineJambrain From United Kingdom, joined Sep 2008, 251 posts, RR: 0
Reply 4, posted (5 years 5 months 1 week 6 days 3 hours ago) and read 2279 times:



Quoting Astuteman (Reply 2):
(a margin of 6.7%)

How could they have a margin of 6.7% when 380 does not have a business case and haemorrhages cash, does not compute I suspect an Enron!!

Or possibly the more the make the more they lose, that must be it!



Jambrain
User currently offlineOsiris30 From Barbados, joined Sep 2006, 3192 posts, RR: 25
Reply 5, posted (5 years 5 months 1 week 5 days 19 hours ago) and read 2192 times:

From another thread I accidentally started that could have been added to this one:

http://www.ft.com/cms/s/0/ca278124-0d44-11de-8914-0000779fd2ac.html

Quote:

The disarray has left EADS unable to provide forecasts for the group’s financial outlook.

and

Quote:

The CEO said the company is “not comfortable” with the current trend in the airliner market and will deepend production cuts if demand continues to deteriorate.

from

http://www.bloomberg.com/apps/news?p...1085&sid=ak5kWqWiTfbU&refer=europe

Worrying statement of the future of the sector overall especially bad for EADS as, just as they get out from under the 380 costs they walk right into the 400M (but in a much less forgiving overall economic climate). It's going to be an ugly few years for all in the sector sadly.



I don't care what you think of my opinion. It's my opinion, so have a nice day :)
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9997 posts, RR: 96
Reply 6, posted (5 years 5 months 1 week 5 days 16 hours ago) and read 2150 times:
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Quoting Osiris30 (Reply 5):
Worrying statement of the future of the sector overall especially bad for EADS

Not sure why this is "bad for EADS especially" per-se.
They're sitting on around 2.5X times the net cash that Boeing are, and have a decent operating margin going into this period. They obviously, and rightly, expect this to decline next year. But I don't see anything there that Boeing, bombardier or Embraer won't equally face.

A400M is just bad news, whichever way you look at it. EADS competitors don't have that on their backs....

The Bloomberg article is interesting.
It's entitled "EADS Profit to Decline on Drop in Plane Prices", but then (rightly) goes on to list the reasons provided by EADS as

Quote:
European Aeronautic, Defence & Space Co., parent of Airbus SAS, said profit will fall this year as the recession crimps demand for new aircraft and Airbus spends more helping customers pay for planes

No mention of "a drop in plane prices"
That's journalism for you...  Smile

In their statements, EADS also quoted adverse hedging movements and increased R+D (presumably A350 based) as other profit-affecting factors.
The one thing they didn't mention was lower prices, and I would suspects that this might be because the prices for most of these planes would have been set some time ago...

Other interesting snippets...

Quote:
“Today’s figures are quite good without any significant disappointment,” Mark Turnwald, an analyst at DZ Bank AG in Frankfurt, said in a note.

and

Quote:
The A380 superjumbo, which held back profit in previous years, is now boosting earnings as the build rate accelerates.

 faint   biggrin 
Andrea Rothman - obviously a big fan of Messers Gellman and Aboulaifa....  duck 

Rgds


User currently offlineFlyingAY From Finland, joined Jun 2007, 700 posts, RR: 0
Reply 7, posted (5 years 5 months 1 week 5 days 16 hours ago) and read 2141 times:



Quoting Astuteman (Reply 6):
They're sitting on around 2.5X times the net cash that Boeing are, and have a decent operating margin going into this period. They obviously, and rightly, expect this to decline next year. But I don't see anything there that Boeing, bombardier or Embraer won't equally face.

Can somebody explain me that why are the profits falling this and next year? Airbus has a huge backlog of planes that will take years to clear (unless there are big cancellations). I understood that airplanes are paid when they get built, so Airbus should have a steady flow of cash coming in as the planes come out the hangars in Toulouse and Hamburg. Of course there are deposits made when new orders signed, but I'd expect that to be rather insignifacant percentage of the whole price.

What am I missing?


User currently offlineLarshjort From Denmark, joined Dec 2007, 1444 posts, RR: 0
Reply 8, posted (5 years 5 months 1 week 5 days 15 hours ago) and read 2112 times:



Quoting FlyingAY (Reply 7):
What am I missing?

That many airlines may defer deliveries some years, either because they don't want to make the investment or because they can't get fundings.

/Lars



139, 306, 319, 320, 321, 332, 34A, AN2, AT4, AT5, AT7, 733, 735, 73G, 738, 739, 146, AR1, BH2, CN1, CR2, DH1, DH3, DH4,
User currently offlineBurkhard From Germany, joined Nov 2006, 4395 posts, RR: 2
Reply 9, posted (5 years 5 months 1 week 5 days 15 hours ago) and read 2093 times:

According to a radio comment I heared, the main reason for the good profit is the stronger $ compared to the €. They have lower costs in $, but get the same in $. That also is a reason for a good forecast, since nobody expects the $ to drop so deaply again.

So even if some costumors need financial aid to take the new planes, with this $ rate Airbus can do it easily.


User currently offlineScouseflyer From United Kingdom, joined Apr 2006, 3385 posts, RR: 9
Reply 10, posted (5 years 5 months 1 week 5 days 15 hours ago) and read 2088 times:



Quoting FlyingAY (Reply 7):
What am I missing?

As Lashjort already mentioned, the economic climate introduces uncertainty into the market with defferals and cancellations even though they're fully booked for 2009 production wise it's unlikely that all of those planes will get delivered in this year - some will be cancelled and come will be deferred. In many cases the slots will be reallocated but that all costs money - reconfig of the planes and remarketting.

It happned last year with IT's widebody fleet that say in TLS before being resold to Arik air amongst others. Whilst they were still paid for those birds, there would of been additional costs of remarketting and and they payment would of hit Airbus' bankaccount 6 months later than expected which affects cashflow.


User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9997 posts, RR: 96
Reply 11, posted (5 years 5 months 1 week 5 days 12 hours ago) and read 2008 times:
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Quoting FlyingAY (Reply 7):
What am I missing?

From the link in reply #1....

http://www.eads.net/1024/en/pressdb/pressdb/20090310_eads_fy2008.html

Quote:
EBIT* will be negatively impacted by:-

Increased Research & Development (R&D) expenses
Significant hedging deterioration
Price deterioration
Increasing customer financing and in-service support costs compared to 2008

So EADS DO mention price (margin) deterioration, but also a set of other factors which can impact EBIT quite significantly (and that's not to mention the A400M which is also quiter capable of impacting EBIT... )

Hope that helps..

Rgds


User currently offlineOsiris30 From Barbados, joined Sep 2006, 3192 posts, RR: 25
Reply 12, posted (5 years 5 months 1 week 5 days 9 hours ago) and read 1926 times:



Quoting Astuteman (Reply 6):
Not sure why this is "bad for EADS especially" per-se.

Because of:

Quoting Astuteman (Reply 6):
A400M is just bad news, whichever way you look at it. EADS competitors don't have that on their backs....

It's one thing to absorb a problematic programme in good times. To have to deal with one in today's environment is totally different.

Quoting Astuteman (Reply 6):

No mention of "a drop in plane prices"

Indeed they (EADS) were surprised by the prices they managed to get in 2008 (i.e. better pricing than they expected).

Quoting Astuteman (Reply 6):
In their statements, EADS also quoted adverse hedging movements and increased R+D (presumably A350 based) as other profit-affecting factors.

Agreed. The $/EU rate is still causing them issues.

Quoting Astuteman (Reply 6):
Quote:
The A380 superjumbo, which held back profit in previous years, is now boosting earnings as the build rate accelerates.

I'm not commenting on that.. you know my stance on the overall business case for the 380. As time goes by and orders don't come in the interest expense on the borrowed funds just drives the r&d cost per frame up and up.



I don't care what you think of my opinion. It's my opinion, so have a nice day :)
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9997 posts, RR: 96
Reply 13, posted (5 years 5 months 1 week 5 days 8 hours ago) and read 1879 times:
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Quoting Osiris30 (Reply 12):
Quoting Astuteman (Reply 6):
Not sure why this is "bad for EADS especially" per-se.

Because of:

I'd understood your comment to be specific to a weakening of the civil airliner market. This should affect all manufacturers fairly equally.
The A400M is, as we agree, a different matter.
EADS seem to be fairly sensibly taking the approach of writing down some A400M exposure fairly early, as they did for the A380 and the A350.
They have done so last year, and (as far as I can tell) have registered an E800M loss on E1500M revenue in 2008.
Seemed to work well for the A380 and A350

Certainly, to execute a c $12Bn programme, take another c $6Bn loss on the roll-out/delay of that programme, terminate ANOTHER programme with a c$2Bn+ loss, and still come out the other side with E9.2Bn net cash, generating E2.5Bn per annum free cashflow (after E2.5Bn per annum self-financed R+D), AND with an operating margin very near to that of your primary competitor, is a pretty extraordinary piece of financial management IMO.

I think I'm on safe ground when I say nobody on this site, for certain, expected it.  no 

It makes you wonder what the position would have been if the programme management outturn had matched the financial management acumen..  faint 

Quoting Osiris30 (Reply 12):
I'm not commenting on that..

No need - the article says it all  duck 

Rgds


User currently offlineOsiris30 From Barbados, joined Sep 2006, 3192 posts, RR: 25
Reply 14, posted (5 years 5 months 1 week 4 days 22 hours ago) and read 1709 times:



Quoting Astuteman (Reply 13):
I'd understood your comment to be specific to a weakening of the civil airliner market. This should affect all manufacturers fairly equally.

No, I was referring to the challenge of having to deal with the conditions that will affect all manufacturers and then adding the 400M primarily, the upcoming R&D spend on the 350XWB (by the way, any word on how EADS intends to secure the capital for the R&D on that one yet, I haven't seen any loan related holy wars yet  Wink ) Additionally I think EADS may have a bit of challenge due to their agressive pursuit of some start-ups (not that I think Boeing tried any less, I just thing Airbus won more business in that marketplace as far as I can tell). Just not a good time to have to deal with the 400M mess.

Quoting Astuteman (Reply 13):
It makes you wonder what the position would have been if the programme management outturn had matched the financial management acumen..

Indeed their bean counters seem to be on the ball as far as polishing some of the turds the programme management team has handed them. It will be very interesting to see if Boeing can execute as well as EADS when it comes to financial performance related to the egg they laid with the 787 build (not a shot at the 787, but the execution has been worse than the 380 IMHO (but better than the 400M)).

Quoting Astuteman (Reply 13):
No need - the article says it all

Cheeky Brit... We'll just have to give that one another good 5-10 years to shake out to see who is right about that one... so if you're still kicking around these parts on Mar 12, 2014, let's talk again  Wink



I don't care what you think of my opinion. It's my opinion, so have a nice day :)
User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9997 posts, RR: 96
Reply 15, posted (5 years 5 months 1 week 4 days 16 hours ago) and read 1636 times:
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Quoting Osiris30 (Reply 14):
(by the way, any word on how EADS intends to secure the capital for the R&D on that one yet, I haven't seen any loan related holy wars yet

I'm interested to see how this one plays out, too.

Airbus (specifically) booked E2.2Bn of self-financed R+D in 2008 which appear on the cost side of the accounts - i.e. if it hadn't been spent, profit would have risen by another E2.2Bn.

The results presentation shows E9.2Bn in net cash, plus an undrawn E3Bn credit facility available until 2012.

In retrospect it seems obvious that what has really paid for the A380, and its fiasco, has been the financial performance on other programmes (a.k.a. A320 and A330), as opposed to "government loans" per se (which in my view actually paid for facilities, buildings and infrastructure, as opposed to the "development" of the A380)

Having achieved this, the "other" programmes (A320, A330, and now A380 too  Wink ) appear to be currently funding the A350XWB development in the same manner.

Currently.....  Smile

Quoting Osiris30 (Reply 14):
so if you're still kicking around these parts on Mar 12, 2014, let's talk again

It will be an honour, and a privilege  highfive 

Rgds


User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9997 posts, RR: 96
Reply 16, posted (5 years 5 months 1 week 4 days 16 hours ago) and read 1620 times:
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Quoting Osiris30 (Reply 14):
the upcoming R&D spend on the 350XWB (by the way, any word on how EADS intends to secure the capital for the R&D on that one yet, I haven't seen any loan related holy wars yet

As a post-script to my last post, the cashflow statement also shows E1.84Bn of "Industrial CapEx (additions)" of which I have to assume a large part was related to the provision of facilities and equipments for the A350XWB.

(Gross cashflow for EADS in 2008 was actually E4.57Bn (or $5.9Bn), which, if EADS had nothing else to do with it, covers off about 50% of the A350XWB's development costs from 1 year's trading. Of course in reality, EADS do have other things to do with it  yes . Still. It's relevant data  Smile )

Rgds


User currently offlineBaroque From Australia, joined Apr 2006, 15380 posts, RR: 59
Reply 17, posted (5 years 5 months 1 week 4 days 13 hours ago) and read 1554 times:



Quoting Astuteman (Reply 2):
E1.8Bn EBIT from Airbus (a margin of 6.7%)

Ouch!

Quoting Astuteman (Reply 2):
And E9.2Bn net cash....

Double ouch!

Quoting Astuteman (Reply 13):
I think I'm on safe ground when I say nobody on this site, for certain, expected it.

Ah well some were close to being forced into that position by being contrarians to the view that Airbus would have been pushing up the daisies for about 18 months - already! Given that one had a contrarian view of that event, something close to those numbers had to be, but it is still a nice surprise even if "predicted" in reverse by the doomsayer(s).

Quoting Astuteman (Reply 15):
In retrospect it seems obvious that what has really paid for the A380, and its fiasco, has been the financial performance on other programmes (a.k.a. A320 and A330), as opposed to "government loans" per se (which in my view actually paid for facilities, buildings and infrastructure, as opposed to the "development" of the A380)

And makes you wonder what they will do with those cash cows once they clear the major effort on the A350. Not that they will not get plenty of advice from a.netters!

I was going to ask you Astuteman if you had been reading the full report or just the PR blurb when I looked at the full PDF and was "horrified" to find that it appears to be easy to understand. What is going on? How long have they been (apparently) reporting in manner that is easy to understand and no longer resembles struggling through a peat bog in heavy snow? I don't know whether to be delighted or suspicious. Anyway, there is not much excuse for not knowing most of the information we have strained to work out in the past.

Well done EADS. Must be the Dutch influence??? Those long nosed Dutch accountants that Shell justly made infamous throughout the world must have been reformed.


User currently offlineAstuteman From United Kingdom, joined Jan 2005, 9997 posts, RR: 96
Reply 18, posted (5 years 5 months 1 week 4 days 10 hours ago) and read 1503 times:
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Quoting Baroque (Reply 17):
How long have they been (apparently) reporting in manner that is easy to understand and no longer resembles struggling through a peat bog in heavy snow?

Ever since I joined A-net.  faint 

I have saved copies of the 2005 EADS presentations, and the format has barely changed.

There's probably more obfuscation from those on here who have a vested interest in promoting the view that "there is something sinister going on", than there is in the EADS press releases....

Quoting Baroque (Reply 17):
Anyway, there is not much excuse for not knowing most of the information we have strained to work out in the past.

Who was straining?  Wink
I've never found it particularly difficult.
I'd also say these results were made fairly easy to predict by the ease with which it was possible to pull the exceptions out of the last 2 years, er "poor" results.....

Airbus's underlying EBIT has remained steadfastly in the 8%-10% range for some years now, and would have been again were it not for the charges taken on the A400M..

Rgds


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