EADS, the European aerospace group and Airbus producer reported a surge in operating profits but said the euro's strength against the dollar would mean another wave of cost cuts.The company reported a 223% rise in first-half operating profit compared with the same period of 2007. First-half operating profit came to 1.158 billion euros (US$1.80 billion) Sales rose 8% to 19.739 billion euros while net earnings shot up 332% 403 million euros.
But the company acknowledged that it had been hard hit by the weakness of the dollar. It has warned it must shift some of its production out of the eurozone. It said the strong euro, which makes EADS products more expensive abroad and decreased the value of dollar-based repatriated earnings, had had a negative impact on operating earnings worth 700 million euros in the first half.
EADS is already in the throes of a vast restructuring to overcome deep problems brought on by delays in the A380 superjumbo program. Delays to the A380 lowered such earnings by 715 million euros.
The company said it expected sales for the full year to come to more than 40 billion euros, with Airbus receiving 850 orders and delivering 470 planes.
The group added that in light of the negative effects of a strong euro against the dollar, it would present a new cost-cutting plan later this year, dubbed Power8 Plus. EADS chief executive Louis Gallois told a tele-conference that the plan would be based on new savings efforts as well as "sub-contracting production to lower-cost countries." But he added that the scheme would have no impact on production in Europe because of an "increase in workload."
Airbus in February 2007 unveiled a restructuring drive it called Power8 that should notably see the elimination of 10,000 jobs by 2010 and the closure of certain sites. EADS said Power8 had "already produced better-than-expected results," making a positive contribution to the first half operating earnings of 400 million euros.
Copyright Agence France-Presse, 2008
