By Tom Pfeiffer and Noah Barkin
UPDATE 3
AMSTERDAM/PARIS, May 17 (Reuters) - European aerospace group EADS said
on Friday it expected to achieve its profit and sales targets for 2002,
despite an airline industry slump which pushed orders for its Airbus
jets down 93 percent in the first quarter.
EADS said it was sticking with a goal for earnings before interest and
tax (EBIT) of 1.2 billion euros and flat year-on-year revenues in 2002.
The company confirmed the forecasts as it reported that first-quarter
EBIT edged up two percent to 315 million euros ($287 million) and the
bottom-line slumped to a loss of 25 million euros, weighed down by
goodwill.
The EBIT figure was above market expectations, but the increase was
flattered by a 63-million-euro gain booked on the sale of Airbus engine
pod-making venture Aircelle and a 59-million-euro positive swing in
"headquarters and eliminations".
"The underlying EBIT was down and there is a conspicuous lack of
guidance for 2003," said Nick Cunningham of Schroder Salomon Smith
Barney.
"We still believe that the dismal state of the airline industry and a
huge surplus of aircraft will lead to lower sales than Airbus expects
next year and the year after."
Shares in EADS were down 0.17 percent at 17.95 euros at 1415 GMT after
pushing earlier in the session to an eight-month high of 18.32 euros.
The stock fell as low as 9.14 euros in the weeks following the
September 11 hijacked plane attacks in the United States.
SIGNS OF RECOVERY
EADS, which has dual headquarters in Paris and Munich but is registered
in the Netherlands, gets nearly all its profits from 80-percent owned
jetmaker Airbus SAS, which slashed its forecast for sales this year by
a quarter after the U.S. attacks exacerbated an industry slump and
forced airlines to scrap plans to buy new aircraft.
But while the industry is still struggling with losses, recent figures
suggest Europe's airlines are starting to see some recovery in demand.
Some brokerages have raised their recommendations on EADS since Airbus
Chief Executive Noel Forgeard said last week that he was more
optimistic about the strength of 2003 aircraft deliveries and confirmed
estimates for 300 deliveries this year.
But many analysts are still sceptical about whether Airbus can keep
deliveries at the same level next year and worries are growing that a
weakening dollar could eat into EADS profits in the years ahead.
EADS Chief Financial Officer Axel Arendt, speaking to analysts on a
conference call following the results, declined to offer a 2003
forecast for deliveries, saying the company hoped to provide a clearer
picture next month.
The crisis in the worldwide air transport industry was evident in the
first-quarter figures, which showed an 80 percent plunge in new orders
to 3.8 billion euros and a 93 percent drop in orders at Airbus to 1.26
billion euros.
Nevertheless, EADS said it remained confident it could meet its targets
and forecast its order backlog would rise above 190 billion euros this
year, helped by a doubling of defence orders.
"We expect our book-to-bill ratio to remain above one thanks partly to
the A400M (military transport plane)," co-CEO Rainer Hertrich told the
company's annual shareholder meeting in Amsterdam.
"Our backlog is showing no weakening even with the decline in air
traffic. It will continue to grow despite the downturn."
Protestors disrupted the question and answer session at the meeting,
pressing the company to reveal whether it was selling military
equipment to "undemocratic or oppressive regimes".
A small group, calling themselves "ethical shareholders", later issued
a statement saying they planned to sue the company for cutting short
the session and refusing to answer some of their questions.