The first quarter of 2016 was not kind to Airbus. New orders were dismal, the backlog declined, revenues were stagnant and net income fell by half from a year ago.
Earnings per share came in at half the first-quarter 2015 total and free cash flow was negative. The company’s cash position at the end of the first quarter of 2016 amounted to €6.44 billion, compared with the year-ago quarter’s hoard of €10 billion. Much of that would be down to production ramp-up on the A320 and A350.
But everything is going to be all right, according to group CEO Thomas Enders:
2016 turns out to be the challenging year we anticipated. Overall, we expect a stable financial performance but deliveries, cash and earnings will be heavily loaded towards the end of the year. And that already shows in our first quarter performance. … So, in a nutshell, despite these challenges we maintain our 2016 guidance and also our earnings and cash growth story for the coming years based on our strong commercial order backlog and the robust, well-resourced production ramp-ups underway.
Airbus expects to deliver more than 650 aircraft in 2016, and it reiterated its statements that the commercial division’s backlog will grow. The company expects its full-year earnings before interest and taxes (EBIT) to be “stable” and says the same thing about earnings per share and free cash flow.
In other words, a no-growth year, and Airbus has dug itself a nice hole to work itself out of if it hopes to match last year’s numbers. Problems with the commercial jet supply chain, especially for passenger seating, have been issues for both Airbus and rival Boeing Co. (NYSE: BA).
And also like Boeing, Airbus is having significant issues with a new military plane, the A400M military transport. To date the company has charged off more than €4 billion on the program and received a €3.5 billion bailout from its government customers, according to the Financial Times.
The geared turbofan engine on the company’s new A320neo is supplied by United Technologies Corp.’s (NYSE: UTX) Pratt & Whitney engine division, and it has suffered a series of problems that have delayed deliveries of the new plane.
Airbus stock traded down about 6.5% in Paris Thursday, at €54.54 in a 52-week range of €49.96 to €68.50.
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