European aerospace group EADS said on Wednesday it was extending its Power8 restructuring at planemaker Airbus and measures to tackle a weak dollar as it posted weaker-than-expected second quarter profit.
The Airbus parent company reaffirmed operating and cash saving targets for the Power8 plan which runs from 2007 to 2010 and said a new Power8 Plus program would deliver a further annual 1 billion euros in 2011-12 at the operating income level.
Second quarter net profit rose 46 percent to 118 million euros, while earnings before interest and tax rose 44 percent to 389 million euros on revenues up 5 percent to 9.886 billion.
Analysts polled by Reuters had on average forecast net profit of 342 million euros and EBIT of 531 million euros.
Second-quarter income was hit by a higher than expected 715 million euro charge for the latest round of delays to the A380 superjumbo, announced in May.
Adjusting for that charge, "Airbus results were pretty strong and clearly beating our and the market expectation," said DZBank analyst Markus Turnwald in a note.
Airbus, the world's No. 1 planemaker by production and No. 2 behind Boeing in terms of orders, made a quarterly operating profit of 84 million euros, down 5 percent, on sales which rose 4 percent to 6.53 billion euros.
EADS reaffirmed its main financial target for 2008 EBIT of 1.8 billion euros, but said this provided "upside potential".
It continued to predict revenues above 40 billion euros with Airbus deliveries of around 470 aircraft.
The group confirmed an increase in its forecast for Airbus orders in 2008 to above 850 from 700 planes following its intake at the Farnborough air show this month.
It raised its forecast for free cash flow before customer financing to more than 1 billion euros, but said this was a volatile item that is difficult to predict.
Planemakers have reported mounting pressure from customers to help finance purchases amid a crisis over high oil prices which is forcing some airlines to cancel or defer purchases.
Under pressure from a weak dollar, EADS said it was taking "decisive actions" on currency hedging and had started to complement its hedging positions by buying a "significant amount" of U.S. dollar options.
"In the first six months of 2008 a negative U.S. dollar impact of around 700 million euros led to loss-making contract adjustments and put pressure on the group's EBIT," EADS said.
For the first half, EBIT rose to 1.16 billion euros from 358 million euros in the first half last year when results were hit by Power8 charges, EADS said.
Net profit rose to 403 million from 71 million.