Missile Work Helps Offset Slump at Astrium Satellites

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PARIS — Europe’s Astrium space hardware and services company on May 14 reported a 2.2 percent increase in revenue for the first three months of 2010 compared with the same period a year ago, with strong growth in its Space Transportation and Services divisions outweighing a decline in revenue in its satellite manufacturing business.

But while revenue was up by just 2.2 percent, to 924 million euros ($1.24 billion at March 31 exchange rates), pretax profit increased by 14 percent, to 41 million euros, or 4.4 percent of revenue. Officials from Europe’s EADS aerospace company, which owns Astrium, have said their target is a 5 percent EBIT — earnings before interest and taxes — margin for Astrium.

Astrium Space Transportation is prime contractor for Europe’s Ariane 5 rocket and for France’s M51 strategic missile. Astrium Satellites is a major builder of commercial and government satellites. Astrium Services provides military satellite telecommunications services to the British Ministry of Defence, NATO and individual allied governments, and Earth observation satellite imagery for commercial use through its Spot Image and Infoterra companies.

In a May 14 conference call with investors, EADS Chief Financial Officer Hans Peter Ring said Astrium Space Transportation completed development of the M51 missile with a successful submarine launch, bolstering first-quarter revenue. The division reported revenue of 452.8 million euros, up 22.2 percent from a year earlier.

Astrium Services revenue, at 226.1 million euros, increased by 8.7 percent compared with the first three months of 2009. The company’s biggest contract, through its Paradigm Secure Communications division, with the British military was extended to 2022 during the quarter, triggering the order by Astrium of a fourth Skynet 5 satellite.

Ring said that in addition to adding capacity for Britain, the Paradigm contract extension will place more X-band satellite capacity on the commercial market and where it will be available to third-party customers.

Revenue from Astrium Satellites, at 245.1 million euros, was down nearly 25 percent from a year earlier. Satellite construction revenue is often based on milestone payments and on satellite deliveries, making quarterly comparisons less valuable as a tool to measure business performance.

EADS does not provide figures detailing the profitability of each of Astrium’s three businesses. But Ring said the increase in earnings before interest and taxes was due to the company’s defense and telecommunications-services work, which more than offset lower profit in Earth observation satellites, and lower revenue and profit in navigation satellites.

 

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