Airbus Group NV’s share price down, projects “rather flat” 2016 earnings, to cut A330 production due to decreasing demand

The shares of Airbus Group NV plunged the most in more than six years after the company announced a projection for its 2016 earnings, projecting they will be “rather flat”. In addition, the company stated it will likely further reduce the manufacturing of its A330 long-range jet, as well as that it is currently dealing with a delay in delivering its A350 jetliner to Qatar Airways.

Airbus forecast that it would be hard for the company to generate cash in the period to 2016, especially at a time when its expenses have increased in order to upgrade aircraft and bring its military division back to profit.

As reported by the Financial Times, the Chief Executive Officer of the France-based company, Tom Enders, said that Airbus 2016 is expected to be “a challenge as far as cash flow is concerned”. Mr. Enders also added that the disposal programme, which the company officially unveiled earlier in 2014 would “support our earnings per share growth”.

The Chief Financial Officer, Harald Wilhelm, said at the companys global investor forum in London that Airbus earnings before interest and tax and before one-offs is expected to be little changed compared to 2015. Analysts had expected a 6% increase.

The companys performance has been seriously affected by the fact it intends to cut the production of its A330 from ten to nine aircraft on a monthly basis in 2015 amid declining demand for widebody aircraft. The Chief Executive Officer of Airbus revealed at the global investor forum of the company that the output will be further reduced in 2016.

Robert Stallard, an analyst at RBC Capital, wrote in a note to investors, cited by Bloomberg: “Investors had hoped to see steady 2016 profit growth. Comments on cash being an outflow in 2015 also look to be marginally more negative than previous comments regarding cash for next year.”

Airbus Group NV lost 2.48% to trade at €42.11 per share as of 9:22 GMT, marking a one-year decrease of 20.35%. The company is valued at €33.88 billion. According to the Financial Times, the 25 analysts offering 12-month price targets for Airbus Group NV have a median target of €57.00, with a high estimate of €72.00 and a low estimate of €34.00. The median estimate represents a 32.02% increase from the last price of €43.18.