Airbus profits take off despite new A400M charge
TOULOUSE, FRANCE: Airbus SE said yesterday that record deliveries, windfall gains from divestments and favourable exchange rates enabled profits to lift off last year, even though it booked a “substantial” new charge on its troubled A400M military transporter plane.
The European aircraft maker said in a statement that net profit nearly tripled to €2.87 billion ($3.6 billion) in 2017 from €995 million a year earlier.
Underlying or operating profit grew by 8% to €4.25 billion and full-year sales held steady at €66.8 billion.
The numbers sent Airbus shares soaring, adding more than 9% in early trading in Paris while the overall blue-chip CAC 40 index was just 1.5% higher.
“We overachieved on all our 2017 key performance indicators thanks to a very good operational performance, especially in the last quarter,” said chief executive Tom Enders.
“Despite persistent engine issues on the A320neo, we continued the production ramp-up and finally delivered a record number of aircraft,” he said.
The number of deliveries of commercial aircraft overall rose to a record 718 in 2017 from 688 in 2016, Airbus said.
Some 181 A320neo aircraft — a new version of the medium-haul A320 jet with more fuel-efficient engines — were delivered, up from 68 during 2016.
But the new engines have also suffered from technical glitches and delays and “the A320neo ramp-up remains challenging,” Enders said.
A net capital gain of €604 million resulting from the divestment of the defence electronics business and “a strong positive impact” from exchange rate developments also helped boost the group’s bottom line, Airbus said.
But Airbus booked a new one-off charge of €1.3 billion against its A400M turboprop military transport, plagued by delivery problems and technical problems.
“On A400M, we made progress on the industrial and capabilities front and agreed a re-baselining with government customers which will significantly reduce the remaining programme risks.
“This is reflected in a substantial one-off charge,” Enders said.
Airbus had already booked a charge of €2.2 billion on the A400M in 2016.
The A400M is the most ambitious joint procurement programme ever launched in Europe, involving seven countries: Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.
But while the nations ordered the planes in 2003, the first were not delivered until 2013 — four years after the contract fell due.
Some 19 A400M planes were delivered in 2017, compared with 17 in 2016.
Airbus said its overall order intake increased to €158 billion in 2017 from €134 billon in 2016, bringing the total order book to €997 billion at the end of December.
Given the “strength of our 2017 achievements,” Airbus would propose lifting its dividend to €1.50 per share for last year from €1.35 a year earlier, Enders said.
“This also endorses our earnings and cash growth story for the future,” he said.
Looking ahead, as the basis for its 2018
guidance, Airbus said it expected the world economy and air traffic “to grow in line with prevailing independent forecasts, which assume no major disruptions.”
On that basis, the group expected to deliver “around 800” commercial aircraft this year — as long as engine manufacturers met their commitments — and underlying or operating profit was projected to rise by “approximately 20%.”