European plane maker Airbus SE (AIR.FR) Thursday reported a sharp drop in first-quarter profit, hobbled by delivery of less profitable planes and higher costs on new models even as its net result benefited from the sale of some defense activities.
Airbus, the world's No. 2 plane maker behind Boeing Co., said its closely watched earnings before interest and taxes stripping out some on-time items fell 52% to EUR240 million ($261.7 million). Airbus delivered 136 planes in the first three months of 2017, 11 more than the year prior, but those included more newer-model airliners that tend to be less profitable than versions that have been in production for longer.
Sales rose 7% to EUR12.99 billion on a rise in plane deliveries.
Net profit rose 52%, boosted by a EUR560 million gain from the divestment of Airbus's defense electronics unit. The sale will lower full-year adjusted earnings per share by around EUR0.14, it said.
Airbus Chief Executive Tom Enders said the company was "on track" to meet full-year targets.
Airbus had EUR1.6 billion in negative free cash flow before mergers and acquisitions, compared to EUR3 billion in outflow in last year's first quarter. Cash flow was negatively impacted because European governments that typically back financing of Airbus deals a year ago suspended the support. Regularities, including Britain's anticorruption Series Fraud Office, are investigating potential wrongdoing on some previous plane transactions.
Airbus has promised to deliver more than 700 planes this year. The Toulouse, France-based company tends to deliver fewer planes at the outset of a year, though supplier bottlenecks have compounded the issue.
Engine supplier Pratt & Whitney, a unit of United Technologies Corp., is struggling to build turbines for Airbus's popular A320neo single-aisle plane. Airbus delivered only 26 A320neo planes in the first quarter, with more than half powered by a rival engine made by a joint venture of General Electric Co. and France's Safran SA.
French cabin interiors specialist Zodiac Aerospace SA, also has been a long-standing headache for Airbus. The supplier is behind on building seats and toilets for the Airbus A350 long-range jet. Only 13 A350s made it to customers in the first three months. It is expected to deliver around 80 such planes this year.
Despite slow deliveries of the new A350, Airbus said it remained on track to start producing 10 of them per month at the end of 2018.
Airbus also is dealing with a marked slowdown in plane orders. The company booked only six net orders in the first three months. Mr. Enders said the low order intake was expected and pointed to more than 6,000 airliners in the company's backlog that have yet to be delivered to reassure investors.
Write to Robert Wall at email@example.com
(END) Dow Jones Newswires
April 27, 2017 01:45 ET (05:45 GMT)