Air­bus profit gains 1.6pc on A350 ramp-up

The Pak Banker - - BUSINESS -

Air­bus Group SE said profit rose 1.6 per­cent last year as it ramped up de­liv­er­ies of the lat­est A350 model and broke even on the A380 su­per­jumbo. Fig­ures were held back by higher de­vel­op­ment spend­ing.

Earn­ings be­fore in­ter­est and tax rose to 4.13 bil­lion euros ($4.6 bil­lion) from 4.07 bil­lion euros a year ear­lier, ex­clud­ing one-time items, as sales gained 6 per­cent to 64.5 bil­lion euros, Air­bus said Wed­nes­day.

Air­bus, which gets two-thirds of rev­enue from its air­liner unit, is ben­e­fit­ing from thou­sands of or­ders for new fuel-ef­fi­cient air­craft placed be­fore the re­cent drop in oil prices. The first A350 was handed over in late 2014, with 14 planes de­liv­ered in 2015 and 50 to be pro­duced this year as the com­pany em­barks on one of the most test­ing out­put in­creases in its his­tory.

Chief Ex­ec­u­tive Of­fi­cer Tom En­ders called the re­sults "solid" and said that Toulouse, France- based Air­bus is "fo­cused on pro­gram ex­e­cu­tion and man­ag­ing the chal­lenges we face with the ac­cel­er­a­tion of the A350." Both cash flow and Ebit, ex­clud­ing items, should be "sta­ble" this year, he said.

"That may not be ter­ri­bly ex­cit­ing, but the last thing we need is ex­cite­ment at this crit­i­cal junc­ture," Sandy Mor­ris, an aero­space an­a­lyst at Jef­feries In­ter­na­tional in Lon­don, said in a note to in­vestors.

Air­bus shares traded 1.3 per­cent higher at 56.12 euros as of 9:05 a.m. in Paris. The stock has de­clined 9.5 per­cent this year af­ter surg­ing 50 per­cent in 2015.

Fourth-quar­ter Ebit be­fore one­offs fell 10 per­cent to 1.33 bil­lion euros, led by a 26 per­cent drop at the jet­liner unit as the busi­ness spent more on re­search and de­vel­op­ment. The con­tri­bu­tion from Das­sault Avi­a­tion SA, maker of Rafale war­planes and Fal­con busi­ness jets, de­clined as Air­bus sells down its stake.

An­a­lysts had fore­cast a full-year profit of 4.38 bil­lion euros, based on 14 es­ti­mates. Free cash flow for the 12 months surged to 2.8 bil­lion euros, buoyed by 1.7 bil­lion euros in pro­ceeds from sell­ing Das­sault shares. While the three-month earn­ings fig­ure was weak, it was more than off­set by the "thun­der­ous" cash per­for­mance, Mor­ris said.

Air­bus's lat­est pro­gram, the re- en­gined A320­neo, saw de­liv­ery of the first plane last month and the com­pany said it's fo­cused on "ser­vice readi­ness for early op­er­a­tions in line with cus­tomer ex­pec­ta­tions," re­flect­ing con­cern about glitches with the Pratt & Whit­ney en­gines sup­plied on some of the planes. De­liv­er­ies will be "back­loaded" this year, it said.

The com­pany boosted sin­gle-aisle out­put ahead of the A320­neo's in­tro­duc­tion with the open­ing of its new Alabama plant in Septem­ber, a move that could also aid U.S. sales.

Pro­duc­tion of the A330 wide-body is be­ing re­stored to seven jets a month, Air­bus said, while 2015 marked the first year in which it has bro­ken even on A380 man­u­fac­tur­ing, though the pro­gram isn't un­likely to ever re­cover its de­vel­op­ment costs.

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