European aircraft manufacturer EADS issued a profits warning on Thursday following a crisis over Airbus production problems, but said that net profit in the first half had risen by 5%.
The group also said that the results of a study into the overall implications of problems in A380 production might reveal further extra costs.
However, it also reported a first-half rise of 18% in sales, an increase in the number of aircraft delivered, and said it expected to make record deliveries in the whole of 2006.
The European Aeronautics Defence and Space Company said that prospects for the whole of 2006 could be affected by the cost of adapting the A350 airliner and delays to the timetable of the A380 superjumbo.
The company cut its forecast for profit before writing down goodwill and exceptional items for 2006 to €3,2-billion, the bottom of a previous range of €3,2-3,4-billion.
The company, with a new management team, is trying to overcome criticism of the design of the A350, which it has now redrawn, and delays to production and delivery of the superjumbo which hit its share price hard, damaged investor confidence in the group as a project manager, and sparked a management shuffle.
The crisis also raised concern about the quality of internal communications between production managers and the management board, and over the way the company communicated with customers and shareholders about possible problems.
EADS said that the latest forecasts took account of the financial implications of the delay to the A380 timetable.
But it also warned that by the end of the year, these forecasts might have to be changed again and that a study of the overall implications of problems in A380 production “could also lead to recognition of extra expenditure”.
The two chief managers at EADS, Tom Enders and his new French counterpart Louis Gallois said in a statement that they wanted to “overcome the immense challenge before us regarding the A380, the A350 and the US dollar”.
In the first half, net profit rose by 5% to €1,04-billion.
Earnings before interest and tax (EBIT) rose by 6% from the equivalent figure last year to €1,63-billion.
Sales rose by 18% to €18,98-billion, of which €13,154-billion was generated by Airbus, an increase of 17%.
EADS also increased its expectations for sales of Airbus in 2006, saying it expected this to be a record of 430 aircraft.
In the first half of the year it delivered 219 aircraft, up from 189 in the same period of last year. – AFP