Astrium Sales on the Rise But Profit Margins Decline

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PARIS — Europe’s largest space company, EADS Astrium, on Nov. 16 reported double-digit increases in revenue and backlog but a lower profit margin for the nine months ending Sept. 30, saying results for its fast-growing services division were weakened by the British pound’s drop in value against the euro.

Astrium
said its profit margin was also reduced by the fact that it received orbital-incentive payments for satellites already in orbit, and that these payments typically have limited profitability. Satellite fleet operators often withhold from manufacturers a percentage of the contract price of a satellite, making annual payments so long as the spacecraft is healthy in orbit.

For the nine months ending Sept. 30, Astrium — the space division of European aerospace giant EADS — reported revenue of 3.23 billion euros ($4.8 billion), an increase of 17.4 percent over the same period in 2008.
Pretax profit was 155 million euros, or 4.8 percent of revenue, down from 5.1 percent for the year-earlier period. Pretax profit was back up, to 5.4 percent, for the three months ending Sept. 30.

Backlog at Sept. 30 stood at 14.9 billion euros, up 35 percent from a year ago in part because of an order for 35 Ariane 5 launch vehicles from the Arianespace launch consortium of Evry, France, valued at more than 4 billion euros. Astrium Space Transportation is prime contractor for Ariane 5.

Astrium
Space Transportation, whose business includes strategic missile development for the French Defense Ministry, remains Astrium’s biggest division, accounting for 41 percent of company revenue for the nine months ending Sept. 30.

But Astrium Services, whose business includes Earth observation and telecommunications services for government and commercial customers, was just behind space transportation, accounting for 38 percent of revenue. Astrium Satellites made up the remaining 21 percent of revenue.

In a Nov. 16 conference call with investors, EADS Chief Financial Officer Hans Peter Ring said all of Astrium’s business lines are doing well, even as other EADS divisions, notably commercial air transport, struggle amid the economic downturn.

“The economic crisis has had a limited effect so far [for Astrium], even for the commercial part of the business,” Ring said. He said Astrium’s work on navigation and Earth observation satellites, missiles and the services division all contributed to the results.

Astrium
Services’ results would have been better were it not for the drop in the value of the British pound against the euro this year, Ring said. Astrium Services’ Paradigm Secure Communications division of
Britain
is handling the services division’s flagship Skynet 5 contract, with the British Ministry of Defence, for a multiyear provision of communications services.