PARIS: Europe’s Airbus has posted a steeper than expected 52 percent drop in first-quarter profit, weighed by weaker prices as it changes to new models and higher production costs, but reaffirmed targets for higher profits for the year.
The world’s second-largest planemaker after Boeing said adjusted operating profit fell to €240 million ($261.7 million) as revenues rose 7 percent to 12.988 billion.
Analysts were on average expecting adjusted operating income of 344 million euros, down 31 percent, and 5.5 percent higher revenues of 12.857 billion, according to a Reuters poll.
Airbus said it was still worried about problems with temperamental engines for its new A320neo passenger plane from Pratt & Whitney, and commercial exposure on the troubled A400M military aircraft program.
It expects deliveries of the A320neo once again to fall predominantly in the latter part of the year, but has said it hopes to avoid the last-minute rush seen in December last year.
The engine issues “need to be resolved,” Airbus said in a statement.
The Airbus planemaking business saw 31 percent lower profit despite a 13 percent rise in revenues. The Toulouse-based firm said this reflected a different mix of aircraft, with more of the new A350s delivered in the first quarter, “transition pricing” and higher production ramp-up costs. New aircraft tend to be sold at heavier discounts to spur further orders.
The Airbus Helicopters unit slipped into loss as the world’s largest commercial helicopter maker continues to suffer from the grounding of aircraft in UK and Norway, following a crash that killed North Sea oil workers.
For 2017, Airbus expects to deliver over 720 aircraft and to report mid-single-digit percentage growth in operating income.
Airbus’ results came a day after Boeing reported a 19 percent rise in first-quarter profit, with its US rival also lifting its full-year forecast. Net income for the quarter ending March 31 rose to $1.5 billion.
Boeing said declining costs boosted earnings for the latest quarter. But revenues fell 7.3 percent to $21 billion, below the $21.3 billion expected by Wall Street analysts. It was only the second time in 21 quarters the company underperformed in terms of revenues.
The firm has been trimming jobs in its civil aviation division due to slowing sales. Chief Executive Dennis Muilenburg pledged to have a “sharp focus on performance and productivity” to reach its financial targets.
Boeing plans to cut hundreds of engineering jobs on June 23 and expects additional cuts by the end of the year. Since the start of 2017, it has eliminated 3,500 positions, or about 2.3 percent of its staff at the end of 2016.
“We are having to deal with a lot of competitive realities in the marketplace,” Muilenburg said.
While Boeing has experienced net job loss, it has been adding some technology-oriented positions out of recognition that “we need to fuel the research and development for the future,” Muilenburg said.
Boeing delivered 169 commercial aircraft in the quarter, down seven from the same period of 2016. Commercial deliveries are closely scrutinized by Wall Street because of their connection to revenues.
Boeing modestly increased its full-year profit forecast by 10 cents a share to a range of $10.35 to $10.55, citing a lower-than-expected tax rate.
Muilenburg said he was encouraged that President Donald Trump had nominated two board members for the Export-Import Bank, which has been hamstrung due to a lack of a quorum following an effort by some in Congress to eliminate the bank.
Muilenburg called the nominations “a very big step” and said he was hopeful “that soon we’ll see a fully operational board.”
The Ex-Im Bank has sometimes been dubbed the “Bank of Boeing” because of its role in providing key financing to Boeing customers over the years to purchase aircraft.
The world’s second-largest planemaker after Boeing said adjusted operating profit fell to €240 million ($261.7 million) as revenues rose 7 percent to 12.988 billion.
Analysts were on average expecting adjusted operating income of 344 million euros, down 31 percent, and 5.5 percent higher revenues of 12.857 billion, according to a Reuters poll.
Airbus said it was still worried about problems with temperamental engines for its new A320neo passenger plane from Pratt & Whitney, and commercial exposure on the troubled A400M military aircraft program.
It expects deliveries of the A320neo once again to fall predominantly in the latter part of the year, but has said it hopes to avoid the last-minute rush seen in December last year.
The engine issues “need to be resolved,” Airbus said in a statement.
The Airbus planemaking business saw 31 percent lower profit despite a 13 percent rise in revenues. The Toulouse-based firm said this reflected a different mix of aircraft, with more of the new A350s delivered in the first quarter, “transition pricing” and higher production ramp-up costs. New aircraft tend to be sold at heavier discounts to spur further orders.
The Airbus Helicopters unit slipped into loss as the world’s largest commercial helicopter maker continues to suffer from the grounding of aircraft in UK and Norway, following a crash that killed North Sea oil workers.
For 2017, Airbus expects to deliver over 720 aircraft and to report mid-single-digit percentage growth in operating income.
Airbus’ results came a day after Boeing reported a 19 percent rise in first-quarter profit, with its US rival also lifting its full-year forecast. Net income for the quarter ending March 31 rose to $1.5 billion.
Boeing said declining costs boosted earnings for the latest quarter. But revenues fell 7.3 percent to $21 billion, below the $21.3 billion expected by Wall Street analysts. It was only the second time in 21 quarters the company underperformed in terms of revenues.
The firm has been trimming jobs in its civil aviation division due to slowing sales. Chief Executive Dennis Muilenburg pledged to have a “sharp focus on performance and productivity” to reach its financial targets.
Boeing plans to cut hundreds of engineering jobs on June 23 and expects additional cuts by the end of the year. Since the start of 2017, it has eliminated 3,500 positions, or about 2.3 percent of its staff at the end of 2016.
“We are having to deal with a lot of competitive realities in the marketplace,” Muilenburg said.
While Boeing has experienced net job loss, it has been adding some technology-oriented positions out of recognition that “we need to fuel the research and development for the future,” Muilenburg said.
Boeing delivered 169 commercial aircraft in the quarter, down seven from the same period of 2016. Commercial deliveries are closely scrutinized by Wall Street because of their connection to revenues.
Boeing modestly increased its full-year profit forecast by 10 cents a share to a range of $10.35 to $10.55, citing a lower-than-expected tax rate.
Muilenburg said he was encouraged that President Donald Trump had nominated two board members for the Export-Import Bank, which has been hamstrung due to a lack of a quorum following an effort by some in Congress to eliminate the bank.
Muilenburg called the nominations “a very big step” and said he was hopeful “that soon we’ll see a fully operational board.”
The Ex-Im Bank has sometimes been dubbed the “Bank of Boeing” because of its role in providing key financing to Boeing customers over the years to purchase aircraft.
