A weaker dollar and major delays at its Airbus unit dragged annual profit down at EADS NV, the company said yesterday, as it posted a multimillion dollar fourth quarter loss and warned that Airbus would "display another substantial loss in 2007."
The Amsterdam-based company lost 768 million euros (US$1.01 billion) in the fourth quarter compared with a profit of 405 million euros a year earlier. Sales, however, were up 11 percent to 11.96 billion euros compared with 10.76 billion euros in 2005.
The European Aeronautic Defence & Space Co said the effects of a series of management and financial crises, including a two-year delay to Airbus' double-decker A380 superjumbo that has wiped more than 5 billion euros off profit forecasts, and charges at the plane maker's A350 XWB program hurt fourth-quarter profits.
Adding to that were higher research and development costs, the company said.
Officially launched in December, the 11.6 billion euro A350XWB program promises better fuel-efficiency and greater use of composites than the earlier version of the plane, but with later availability.
So far, Finland's Finnair has agreed to order nine of the planes and Airbus is in talks with other airlines about converting 93 outstanding A350 orders for the widebody model.
But the new Airbus jet is five years behind its rival, Boeing Co's 787 "Dreamliner," which has already notched up 464 firm orders.
Airbus posted a fourth-quarter operating loss of 1.72 billion euros compared with a 453 million euro operating profit in the same period a year ago. During the fourth quarter EADS bought BAE Systems PLC's 20 percent stake in Airbus for 2.75 billion euros.
Sales rose 8 percent to 6.6 billion euros compared with 6.14 billion euros in 2005.
For the year, Airbus, based in Toulouse, France, had an operating loss of 572 million euros compared with a profit of 2.3 billion euros in 2005. Sales rose 14 percent to 25.2 billion euros compared with 22.2 billion euros in 2005.
Overall, EADS earned 99 million euros last year compared with 1.67 billion euros in 2005 as sales rose 15.4 percent to 39.4 billion euros from 34.2 billion euros a year earlier.
Analysts polled by Dow Jones Newswires had expected a net profit of 39 million euros last year.
Co-chief executives Tom Enders and Louis Gallois said that the results were hampered by Airbus, but predicted the recently announced Power8 restructuring plan would help return the unit to profitability.
Airbus plans to cut 10,000 jobs and spin off or close six of its European manufacturing plants, under the auspices of the Power8 plan, which was unveiled on Feb. 28.
Looking ahead this year, the company said it expected a single-digit increase in revenue and said that Airbus revenues would likely remain stable based on an expected 440 to 450 deliveries this year.