Chris Jasper/MUNICH Julian Moxon/PARIS
The future balance of power within Europe's aerospace and defence industry has become clearer, with DaimlerChrysler Aerospace (Dasa) and Aerospatiale Matra revealing their final set of financial results before their formation of European Aeronautic, Defense and Space (EADS), along with Spain's CASA.
Taken with recently published data from the UK's BAE Systems, the results show that Europe's two new aerospace giants will be well-matched for size, but with different core activities - EADS relying heavily on the civil sector and BAE having evolved into an out-and-out defence systems integrator.
Aerospatiale Matra and Dasa both saw sales rise by 5% last year, with the German company reporting a turnover of €9.19 billion ($8.8 billion) and its French ally €12.90 billion, giving them a combined turnover of $21.24 billion at current rates. Factoring-in CASA sales at 1998 levels would give a total turnover of $22.36 billion.
BAE Systems has reported pro forma sales for the year (assuming British Aerospace and Marconi Electronic Systems had operated as a single entity throughout) of $19.59 billion, so that the two European heavyweights are of roughly comparable "mass".
The pair are less well-matched by sector, however. Civil aircraft production is the most important activity for EADS, with Dasa's civil aircraft division contributing 36% of sales and 42% of orders by value, and Airbus work alone delivering 42% of Aerospatiale Matra sales.
BAE, by comparison, says pro forma civil aerospace sales accounted for 23% of last year's turnover, with defence activity accounting for almost all the rest. On the Eurofighter Typhoon, for example, BAE has 43% of value, excluding engines, while EADS will have 24%, or 37% if it secures an alliance with Italy's Alenia.
Areas where the pair compete directly are few, while their geographical strengths are also different; half of EADS' sales are in Europe. Two-thirds of BAE's business comes from beyond its home continent.
Dasa president Manfred Bischoff says EADS must float in the first half of this year. But the transformation of Airbus into a single company would seem to be a prerequisite for such a move, in that for as long as BAE retains a veto over its core activity, EADS' value to potential shareholders must be in question. This could allow BAE to drive a hard bargain in ongoing horsetrading.
For Aerospatiale Matra, chairman Philippe Camus says the drive now will be "to improve the returns on investment" in tandem with the creation of EADS. Net profit fell drastically to c30 million (down 93%) due to privatisation costs and failed currency hedging, while operating profit slipped by 2.8%, to €480 million. Camus hopes a 28% second half rise will be a "marker for our performance in 2000".
Dasa's net figure also slumped, to €60 million (down 90%), due mainly to changes in German tax law, but operating profits leapt by 17%, to €730 million.
Source: Flight International
