EADS share price rises on prospect of higher dividends

on Dec 13, 2013
Updated: Oct 21, 2019

iNVEZZ.com, Friday, December 13: EADS NV (EPA:EAD), will not allocate resources to areas where growth is difficult to access, Chief Strategy and Marketing Officer Marwan Lahoud told investors yesterday, sending the shares of the Airbus parent higher.

The EADS share price yesterday closed at €53.52, close to the record €54.50 set last month. The shares have advanced nearly 80 percent this year, valuing the European aerospace and defence group at €41.6 billion (£35 billion).
Speaking at EADS’ two-day annual Global Investor Forum for institutional investors and analysts in London, Lahoud said that commercial aviation at the group would strive for growth and defence and space would consolidate their positions.

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A day earlier Chief Executive Officer Tom Enders presented investors with plans for positive cash flow from next year, rising dividend payouts equal to as much as 40 percent of net income and a 10 percent operating margin by 2015 before one-off items and excluding dilution from the upfront development costs of the A350. Outlining a future for the European Aeronautic Defence and Space company based on receipts from the new fuel-efficient Airbus A350 long-range jet, stable production of the A380 superjumbo and a boost from the A320neo toward the end of the decade, Enders said: “We’ll continue to focus on improving our profitability, our earnings, as well as our cash situation.”

Like many aircraft in their start-up phase, the the A350 programme is expected to be loss-making initially, but should become less burdensome from 2017 and break even by 2020. Enders told analysts the A350 development was “progressing well” and reaffirmed plans to put the lightweight jet into service in the second half of next year. Flight testing began in June with two jets having been in the air for more than 700 hours and a third due to join the trials before March. Airbus has booked 814 orders for the long-haul plane, with pricing that should deliver healthy margins, EADS Chief Financial Officer Harald Wilhelm told investors.

The A380 programme which was launched in 2007, is a loss-maker but should break-even in 2015, said Enders.
EADS’ plans to boost profitability also rest on a successful restructuring of the group’s defence and space businesses. They are being combined into an integrated unit together with Airbus’ military division that makes the A400M transport aircraft, in an effort to cut costs. The need for efficiency at EADS is great, and not just because of reduced defence spending by western governments. One of the EADS’ main defence assets is its 33 percent stake in a consortium that builds the Eurofighter combat aircraft. Enders hopes the company can secure more sales outside of Europe with the next order possibly coming from the United Arab Emirates.
**As of 9:42 UTC buy EADS shares at €53.43**
**As of 9:42 UTC sell EADS shares at €53.42**
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