Airbus increased sales and profits significantly in the third quarter, but missed market expectations.
The European aerospace group confirmed its annual forecast.
“Demand for our commercial aircraft is very strong and the widebody market recovery continues,” said CEO Guillaume Faury, according to the statement. “We assume that the supply chain will remain a challenge as production ramps up. Against this background, we are sticking to our forecast for the full year.”
In the period from July to December, sales rose by 12 percent to 14.897 billion euros, Airbus announced. This was thanks to the aircraft division with a sales increase of 22 percent, while revenues at Helicopters and in the defense and space business Defense and Space were below the previous year.
Adjusted earnings before interest and taxes (Adjusted EBIT) increased by 21 percent to 1.013 billion euros. The bottom line is a net profit after taxes and third parties of 806 million euros after 667 million in the same period last year. Airbus earned 1.02 euros per share after 85 cents.
The consensus of analysts had expected sales of 15.098 billion euros, an adjusted EBIT of 1.142 billion euros and a net profit of 837 million euros. They also saw earnings per share increase by 6 cents.
In the first ten months of the year, the manufacturer delivered 559 aircraft and is still aiming to deliver 720 aircraft for the year as a whole.
Airbus wants to continue to increase adjusted EBIT to 6.0 billion euros in 2023, from 5.63 billion euros last year. Just over half of this, 3,631, was achieved in the first nine months.
In terms of free cash flow (FCF) before mergers and acquisitions (M&A) and customer financing, Airbus is still targeting 3.0 billion euros, after 4.68 billion in 2022. Of this, 1.04 billion euros were generated in the first nine months. This implies that this cash flow was negative in the quarter, because for the first half of the year Airbus reported FCF before M&A and customer financing of 1.574 billion euros.
Airbus wants to build more A350s – criticism of the federal government
Airbus is responding to the growing demand for long-haul aircraft after the corona pandemic.
Ten Airbus A350 aircraft are to be built per month from 2026, as many as were already planned before the crisis, the French-German aircraft manufacturer announced on Wednesday evening in Toulouse. Airbus had previously planned to have nine A350s by the end of 2025. For the short- and medium-haul A320/A321 model, Airbus remains confident that it will increase production to 75 aircraft per month by 2026. According to insiders, there are currently a good 50. For the current year, the group is sticking to its goal of delivering 720 commercial aircraft. After nine months there were 488, 51 more than a year earlier. 71 were added in October.
In 2024, production will be significantly higher, said Airbus boss Guillaume Faury. “We continue to make progress in executing our business plan in an environment that is becoming increasingly complex around the world.” Demand for aircraft is very strong, and long-haul aircraft in particular are continuing to rise. In the first nine months, 1,241 aircraft orders were received net – i.e. minus cancellations – compared to 647 a year ago. The order backlog has now swelled to almost 8,000 aircraft.
“We expect the supply chain to remain challenging for a while,” admitted Faury. This is primarily about engine manufacturers. MTU partner Pratt & Whitney, the most important engine supplier for the best-selling A320, recently launched a huge recall campaign.
RECONSTRUCTION IN THE ARMS DIVISION
The increasing production drove sales in the first nine months by twelve percent to 42.6 billion euros. The adjusted operating profit climbed by four percent to 3.63 billion euros, with the aircraft business alone contributing 3.22 billion. The gains there offset write-downs in the satellite business, where Airbus wrote off 300 million euros on some loss-making, long-term contracts. Airbus has launched a transformation program for the defense and space division. It’s about better balancing risks and opportunities – for example with the A400M military transport aircraft. That could take three to five years, said Faury.
The Airbus boss harshly criticized the federal government’s ongoing export ban on military equipment to Saudi Arabia, a customer for the Eurofighter fighter jet. This is “very damaging for the Eurofighter and for Germany’s reputation as an export country,” said Faury. There are signs that the federal government is giving up its tough stance, “but not at the speed that we need.” Manching, Bavaria, is not in danger as a location for Eurofighter production.
Faury responded to a report in the London Times that he sees no signs of Germany moving away from the European FCAS fighter aircraft system. “On site we find the exact opposite.” The government in Berlin had already rejected the report as lacking substance.
For the full year, Airbus continues to target an adjusted EBIT of six billion euros. The operating cash inflow (free cash flow) is expected to reach three billion euros. After nine months it is 1.04 (2.90) billion euros.
Airbus under pressure according to numbers and recent good run
The figures presented by Airbus the evening before did not convince the aircraft manufacturer’s investors on Thursday. At times the price fell by 2.65 percent to 126.92 euros via XETRA. The result in the third quarter missed the consensus estimate. It didn’t help that the company wants to complete significantly more aircraft next year than in 2023, despite existing problems with suppliers.
In view of the price losses, a stock exchange expert emphasized that the shares had had a good run before the figures were presented. Given a peak increase of almost 9 percent since the October low, the figures now published are not sufficient for a positive price reaction. However, experts pointed out that one-off effects in the defense and space business had caused the weak result. According to Marc Zeck of Stifel Research, the operating trend was fundamentally fine.
FRANKFURT (Dow Jones / dpa-AFX Broker) / Paris/Munich (Reuters)