ALEXANDER CAMPBELL / LONDON
Income from A400M balances poor airliner and satellite performance, but weakening dollar spells danger ahead
EADS last week revealed first-half figures showing it is on course to meet its full-year financial targets, with the first income from the recently signed Airbus Military A400M transport aircraft contract set to help compensate for still-weak airliner and satellite markets.
But the company is preparing to face a sustained weakening of the US dollar, which could place EADS, its 80%-owned subsidiary Airbus and other European manufacturers under severe pressure.
EADS revenues fell slightly for the six months to June, to €13.1 billion ($15.1 billion) compared with €14 billion in the first half of 2002. It says, however, that Airbus is on target to deliver 300 aircraft this year, giving EADS earnings before interest and taxes (EBIT) "in the same range as 2002's figure of €1.4 billion".
Chief financial officer Hans Peter Ring says the company faces the threat of the weakening US dollar, which has fallen from €1.14 to c0.87 in the last two years, handing Boeing a relative price advantage.
"The continuing weakening US dollar will have an impact on revenue in the long term," he says, "but cost savings at Airbus will buffer against this." Airbus aims to save €1.5 billion a year by 2006.
Others feeling the effects of the weak dollar include Thales, which says it effectively lost €108 million in sales in the first quarter of 2003, and Smiths, which reported that growth in North American sales this year "was masked by the decline in the dollar rate".
Source: Flight International
