Airbus share price up, posts strong nine-month results despite decline in Q3 net income

Airbus Group reported strong performance for the first nine months, but said full-year results could be affected by additional costs related to its A400M military airlifter program.

For the recent quarter, Toulouse, France-based Airbus stated net income of €264 million, down 41% from a year earlier, when they stood at €445 million. The company sold more of the unprofitable A380 super jumbos and less of the money-making single aisle and wide body jets. Revenue for the period remained flat at $13.3 billion.

Europes largest aerospace group did not change its full-year guidance, but warned that costs associated with the A400M military transport program could have an impact on results.

“Negative cost and risk evolution mostly driven by military functionalities challenges, delays in aircraft acceptance and industrial ramp-up together with associated mitigation actions are under assessment and will be finalized for the 2014 full year accounts” the company said.

The manufacturing process of the A400M aircraft has fallen behind plan roughly 4 years, as the complex systems of the plane and its large turbo-propeller engine have provided difficulties for the company. Rising expenses almost forced Airbus to drop the program, but it renegotiated terms with government buyers.

The military aircraft is used in the French, Turkish and the Spanish armies, among others. However, some buyers, like Germany and the U.K., have reduced the number of planes ordered. So far the A400M has 174 bookings.

As promised, the company said it would deliver its latest plane, the A350 long-range jet, to Qatar Airways by the end of the year. The jet received regulatory approval by European authorities to enter service at the end of September, later this week the U.S. is also expected to support the aircraft. However, Airbus still has problems with the program and called it “challenging”.

The aircraft manufacturer already surpassed its sales target for the jet, which so far has 794 net orders in the first ten months, up from the full-year projection of 626 orders.

Airbus reported a 12% increase in underlying operating profit for the first nine months to €2.6 billion. Revenue for the period increased 4% to €40.5 billion, compared with last years result of €38.95 billion.

Net income stood at €1.40 billion with €1.79 earnings per share, compared year-to-year with net income of €1.2 billion, or €1.51 earnings per share.

Airbus Group NV lost 0.73% on Thursday and closed at €47.70 in Paris. On Friday the stock gained 3.47% to trade at €49.36 at 09:38 GMT, marking a one-year decrease of 6.42%. The company is valued at €37.43 billion. According to the Financial Times, the 25 analysts offering 12-month price targets for Airbus Group NV have a median target of €59.00, with a high estimate of €73.00 and a low estimate of €34.00. The median estimate represents a 23.69% increase from the last close price of €47.70.