Monday, aerospace and defense company EADS NV (EADSY.PK, EADSF.PK) reported a loss for the third quarter of fiscal 2009, reflecting lower results at its Airbus and Defence & Security businesses and negative foreign exchange impact on asset revaluation. The company backed its fiscal 2009 new gross orders outlook and said that A400M's first flight is expected to take place around the end of the year.
The company reported third-quarter net loss attributable to the equity owners of the parent of EUR 87 million or EUR 0.11 per share, compared with a profit of EUR 679 million or EUR 0.84 per share in the year-ago period. Net loss for the quarter was EUR 85 million compared with a profit of EUR 687 million in the prior-year period.
The company attributed the quarterly loss to lower earning before interest and taxes, or EBIT, at the Airbus and Defence & Security divisions and unfavorable foreign exchange rates on asset revaluation.
Revenues declined 2% in the third quarter to EUR 9.53 billion from EUR 9.70 billion last year. EBIT for the quarter was EUR 201 million, down from EUR 860 million in the previous year.
By division, the company's Airbus segment posted revenues of EUR 6.24 billion, down 3% from EUR 6.43 billion a year ago. In the segment, Airbus Military revenues dropped 26% to EUR 782 million from EUR 1.05 billion in the previous year. At Airbus, EBIT dropped 99% to EUR 4 million from last year's EUR 754 million, which was supported by a EUR 965 million effect from the revaluation of loss-making contract provisions at the closing spot rate.
The Eurocopter segment revenues totaled EUR 1.13 billion, up 15% from last year's EUR 986 million. EBIT rose 10% to EUR 66 million due to higher volume and lower R&D partly offset by margin pressure in the NH90 program.
Astrium generated revenues of EUR 1.03 billion, down 1% from EUR 1.05 billion in the prior-year quarter. EBIT was EUR 56 million, an increase of 8% from the prior-year quarter due to better operational performance.
Defence & Security revenues slid 14% to EUR 1.14 billion from EUR 1.32 billion last year. EBIT totaled EUR 77 million, 9% lower than last year, hurt by higher R&D expenses, lower volume on core programmes and the transfer of aerostructures activities to Airbus.
Other Businesses revenues were EUR 243 million in the quarter, compared with EUR 361 million in the third quarter of 2008.
For the nine-month period, the company's net income was EUR 291 million or EUR 0.36 per share, compared with EUR 1.08 billion or EUR 1.34 per share a year ago. Revenues totaled EUR 29.72 billion, up 1% from EUR 29.44 billion last year, supported by stronger commercial aircraft deliveries at Airbus, offset by lower revenue recognition in the A400M programme and price deterioration on commercial aircraft deliveries. Growth at Astrium and Eurocopter contributed to the positive revenue development, EADS noted.
Further, the company stated that nine-month period order intake decreased to EUR 24.6 billion from EUR 88.7 billion last year, reflecting the weaker commercial environment. On September 30, the company's order book stood at EUR 378.0 billion, lower than EUR 400.2 billion at the year-end.
EADS also said that ongoing negotiations with customer OCCAR and launch nations with regard to the A400M program enter the difficult last phase. As previously reported, the current phase of negotiations provides an opportunity for all parties involved to realign the program. The company intends to reduce any further potential loss, but the full financial consequences of the delays will only be known once the negotiations are finalized.
As per the company, it has progressed with the A400M program from a technical perspective. With a total of 18 flights and 55 flight hours, the flight test bed for the engine has now been completed. The company has also received the final first flight version of the FADEC software. In addition, testing on the Iron Bird is providing satisfactory results. Given the technical progress achieved, the A400M's first flight is expected to take place around the end of the year.
Meanwhile, the company's nine-month period EBIT results had an impact of negative EUR 224 million due to the continuing high level of uncertainty on the program. Substantial negative income statement impacts may still have to be booked in future periods depending on the progress of development and the outcome of negotiations on the A400M program, EADS noted.
Further, the company expressed disappointment on the South African government's decision to withdraw from the A400M program and to cancel its order for eight aircraft. Industrial and financial implications for the company have to be assessed precisely, EADS stated.
Looking forward, the company said that it is cautiously envisaging an improvement of the economic and market conditions in the next months. For 2010, the company is still cautiously monitoring its production rates in a soft market environment. EADS believes that deterioration of hedge rates and uncertainties surrounding the A380, and if unresolved in 2009, the A400M would challenge the delivery of Power8 savings, a better aircraft pricing level and further progress in space and defense.
Further, EADS stated that long-term dollar level is an important driver for its earnings power over the coming years. The company also maintained its 2009 new gross orders estimate of up to 300 aircraft. Production rates also remain stable. Deliveries are expected to be around 490 aircraft in 2009.
In addition, the company sees full-year 2009 revenues roughly in line with the 2008 level. However, further deterioration of exchange rates in the fourth quarter could lead to slightly lower group revenues.
The company's EBIT before one-off items for the full-year 2009 is expected to be around EUR 2 billion. The company said that it is not able to give EBIT guidance for the year due to ongoing uncertainties on the magnitude of the potential A400M and A380 charges in the fourth quarter.
EADSY.PK closed Friday's trading at $19.72 while EADSF.PK ended at $19.90.
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