08.11 Earnings Round-Up – EADS, Societe Generale

on Nov 8, 2012

**EADS Sees Robust Financial Results but Free Cash Falls by One Third**

The European Aeronautic Defence and Space Company EADS (EPA:EAD) achieved robust financial results in the first nine months of 2012 with revenues increasing by 14 percent year-on-year to €37.3 billion (£29.8 billion) driven by growth in all divisions. Reported earnings before interest and tax (EBIT) amounted to €1.62 billion (£1.29 billion), an 82 percent increase from last year’s €885 million (£683 million). Until the end of September physical deliveries continued at high level with 405 aircrafts at Airbus Commercial and 300 helicopters at Eurocopter.

“Our performance over the first nine months shows double-digit revenue growth and a strong increase in profitability. The latter reflects, not least, our continued focus on programme management and execution,” said Tom Enders, chief executive of EADS.
The bad news for investors is that EADS saw its cash dwindle by a third in the first nine months as about a dozen A380 superjumbos await delivery and the company negotiates development aid from the German government. About €3.28 billion (£2.62 billion) of outflow cash were reported by the parent corporation of Airbus SAS, pushing the company’s net reserves to around €8.1 billion (£6.47 billion) from last year’s €11.4 billion (£9.1 billion). EADS also lowered its guidance for its cash flow saying it would break even rather than be positive. “It’s a very poor cash outcome,” said Nick Cunningham, an analyst at Agency Partners in London. “They’re saying they’ll get most of it back by yearend but they’ve changed the guidance now. And those are pretty big provisos.”

!m[Dwindling Cash Reserves for EADS, 86 Percent Profit Loss for Societe Generale](/uploads/story/749/thumbs/pic1_inline.png)Around 11.15 Central European Time the stock price has lost 0.66 percent to €27.05 from its Wednesday closing price of €27.23.
**Societe Generale Suffers Sharp Profit Decline Due To One-Time Losses**
Societe Generale (EPA:GLE), France’s second-largest bank, reported an 86 percent decline in third-quarter profit as the investment-banking rebound was outweighed by losses on asset sales and a charge related to its own debt. Reported net income in the third quarter was €85 million (£68 million) compared with €622 million (£497 million) for the same period in 2011 and well below a Reuters’ survey estimate of €139 million (£111 million).

The losses came from sales of assets in Greece and the United States, a €389 million (£311 million) re-evaluation of the bank’s own debt and good-will write-downs. Without those one-time items the bank has an underlying net income of €856 million (£684 million).
“The underlying performances are satisfying,” said Francois Chaulet, who helps manage €250 million at Montsegur Finance in Paris, including Societe Generale shares. “It’s a kickstart on improving profitability” after cutting assets and increasing capital, said Chaulet as quoted by Bloomberg.

The bank has pledged to reach a core Tier 1 capital ratio of 9 to 9.5 percent, which is required by Basel III standards, by the end of 2013 through retaining profits and reducing assets. BNP Paribas, France’s largest bank and major competitor, already reached its 9.5 percent at the end of this year’s third quarter.
Shares in Societe Generale slightly edged up in today’s trading session to €24.69 after closing at €24.59 yesterday.


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