EADS Q3 dips, stays cautious on FY

PARIS (Reuters) - EADS unveiled a 77 percent drop in third-quarter core earnings on Monday, as it battled a downturn in civil aviation and the damaging effect of the weak dollar along with delays to its A400M programme.

Europe's largest aerospace group said earnings before interest and tax (EBIT) fell to 201 million euros ($301 million) for the third quarter.

EBIT before one-offs, which EADS says gives an underlying flavour of the business by excluding one-off charges caused by provisions or foreign exchange impacts, reached 381 million euros, compared with a forecast of 296 million euros.

EBIT before one-offs fell to 1.7 billion euros for the first nine months, compared with 2.6 billion euros last year.

The company said increased volumes and savings linked to its Airbus Power8 cost-cut plan were not enough to compensate for worsening hedge rates, increased cost and falling prices on aircraft deliveries.

The group declined to give estimates for full year profitability, citing uncertainty over the magnitude of potential charges for the high-profile and much-delayed A400M and A380 programmes.

"The EBIT guidance looks in our view pretty disappointing," wrote DZ Bank analyst Markus Turnwald in a research note.

"Besides ongoing issues with the A400M, Airbus now also might have to book provisions in the fourth quarter 2009 due to problems related to the A380. Furthermore the strengthening of the euro compared to the U.S. dollar is impacting the results," he added.

Aircraft are traditionally priced in dollars, which makes life difficult for EADS and its planemaking unit Airbus, whose manufacturing base is in Europe.