Astrium Reports Jump in Both Sales, Profit Margins for 2008

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  Space News Business

Astrium Reports Jump in Both Sales, Profit Margins for 2008

By PETER B. de SELDING
Space News Staff Writer
posted: 17 March 2009
05:01 pm ET






PARIS
— The Astrium space division of
‘s EADS aerospace conglomerate reported sharply higher sales and pretax profit in 2008 on improved performance in its Ariane 5 launch vehicle and French strategic missile businesses and continued profitability in its services division, EADS announced March 10.

The company reported a 5.5 percent pretax profit margin on 2008 revenue of 4.29 billion euros ($5.43 billion), up sharply from the 4.9 percent margin in 2007 despite the decline in the value of the British pound relative to the euro. Astrium Services’ Paradigm Secure Communications, which provides satellite telecommunications services to the British Defence Ministry, generates most of its business in pounds.

The revenue figure represents a 21 percent increase over 2007. Back orders stood at 11 billion euros as of Dec. 31, down 14 percent from a year earlier as major space station and other hardware deliveries were recorded.

Astrium
Space Transportation is prime contractor for
Europe
‘s Ariane 5 heavy-lift launch vehicle, and is also prime contractor for
Europe
‘s
Columbus
space station laboratory and the Automated Transfer Vehicle (ATV), an unmanned cargo carrier that made its inaugural flight to the international space station in 2008.

The same division is also prime contractor for
France
‘s M51 strategic missile, which completed its third flight test in 2008 and demonstrated an underwater-launch capability for the first time.

EADS Chief Financial Officer Hans Peter Ring said in a March 10 conference call with investors that Astrium’s profitability grew for the fifth consecutive year and that the company delivered on its margin outlook. EADS managers had long set a 5 percent pretax profit margin as Astrium’s goal, and the company has been able to reach it largely thanks to Astrium Services’ Paradigm business.

Both the British Defence Ministry and the NATO alliance have signed long-term contracts for Paradigm in-orbit capacity, and Paradigm is marketing satellite bandwidth to other nations’ military forces as well.

Astrium
Satellites delivered six commercial geostationary-orbiting telecommunications satellites in
2008, a
record for the company. One of these satellites, the W2M telecommunications satellite built with
India
‘s Antrix commercial space company for satellite-fleet operator Eutelsat of Paris, failed in orbit in January and is considered a likely total loss, meaning Astrium likely will book a charge in 2009 for the loss of future annual performance payments.

For 2008, Astrium Services accounted for 19 percent of Astrium’s total revenue. Astrium Space Transportation was 46 percent of the total, with Astrium Satellites accounting for 35 percent.

In addition to increased revenue as the Paradigm business picks up – the third Skynet 5 military communications satellite was launched in June 2008 – Astrium Services in 2008 purchased the French government’s shares of Spot Image of Toulouse, France. The Spot Image business alone accounted for 16 million euros of Astrium’s pretax profit.

Astrium
Services also purchased, in late 2008, i-Mass of
Britain
, a provider of integrated geo-information solutions to British public safety and utility markets.

Astrium’s
purchase of small-satellite specialist Surrey Satellite Technology Ltd. of Britain was not formally concluded until January and did not affect the 2008 results, but Ring said the purchase will help broaden Astrium Satellites’ product offering.

EADS Co-Chief Executive Louis Gallois said the company in the coming months will be taking measures so that the space division and EADS’s Defense and Security division can work more closely to develop a unified approach to common customers.