sparks relief rally as first-quarter profit beats forecasts
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[May 13, 2014]
By Tim Hepher and Cyril Altmeyer
— Airbus Group posted
better than expected first-quarter earnings on Tuesday, sparking a
relief rally in its shares as it dodged the impact of higher costs
for its new A350 jet, which remains on track for a late-2014 debut.
Shares in the world's second-largest aerospace group after Boeing <BA.N>
rose by around 5 percent to 51.92 euros, their highest in more than
a month, after it issued an upbeat report on A350 testing and
exceeded profit forecasts by about 10 percent.
"This is a very good start to the year and guidance remains
unchanged," Cantor Fitzgerald said in a note to investors.
Airbus shares had fallen 11 percent since the start of the year,
underperforming Boeing, which raked in more orders than its European
arch-rival in the first quarter.
The Franco-German company is among a number of European exporters
facing concerns over recent gains in the euro.
First-quarter operating income before one-off items fell by a
smaller than expected 4.6 percent to 700 million euros ($963
million) as revenue rose 5 percent to 12.6 billion, and analysts
said it had improved execution on key programs.
Analysts were on average expecting underlying quarterly operating
income to fall 13 percent to 644 million euros on revenue of 12.4
billion, according to a poll carried out for Reuters
Confirming recent comments by Europe's aviation regulator, Airbus
Group said its latest jetliner, the A350, was "progressing towards
certification" in the third quarter in time for first delivery by
the end of the year to Qatar Airways.
Completing Europe's answer to the lightweight carbon-composite
Boeing 787 Dreamliner is seen as the biggest issue facing the
Franco-German group as it tries to boost margins and avoid technical
problems and delays experienced by its rival.
The head of the European Aviation Safety Agency told Reuters last
week the A350's safety certification, the key milestone before any
new aircraft's delivery, appeared to be on track for the end of the
summer barring any new hiccups.
Industry sources say it could come as soon as the end of August, but
Airbus remains wary of problems that blighted previous civil and
military programs and has boosted support spending to ensure a
smooth first delivery and ramp-up in production.
"The A350 is in a critical phase, and challenges and risks remain,"
Finance Director Harald Wilhelm told reporters.
Airbus struck an even more cautious note on its flagship jetliner,
the double-decker A380 superjumbo, saying it was "acting on the
lessons" gleaned from six years in service.
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It is taking advantage of the first heavy maintenance overhauls to
incorporate improvements after recent glitches that include problems
with door noise, Wilhelm said. A cargo door alert reportedly forced
an A380 to turn around last week.
Despite disappointing sales, Airbus still aims to break even on the
jet in 2015 and expects to deliver 30 this year and next.
Airbus also reaffirmed plans to cut 5,800 jobs as part of a
restructuring of the company's defense and space division, where
Wilhelm expected talks with unions to be completed in mid-year.
Airbus said Turkey had taken its first delivery of the A400M
military transporter after a stand-off that delayed delivery and
distracted attention from its previous results.
Airbus meanwhile reported another hefty outflow of cash in the first
quarter as it earmarks liquidity for major projects.
Free cashflow before acquisitions came in at a negative figure of 2
billion euros, but this was less than some analysts had feared and
well below the 3.2 billion seen a year earlier.
Airbus is aiming for stable free cashflow for the year.
Revenue at Airbus Helicopters rose 14 percent, and operating profit
at the former Eurocopter unit almost trebled compared with the same
quarter a year ago when flight restrictions in the wake of a series
of incidents hit Super Puma deliveries.
($1 = 0.7270 Euros)
(Editing by James Regan and Tom Pfeiffer)
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