(AOF) – After issuing a warning yesterday on its results, the aircraft manufacturer Airbus (-11.21% to 132.12 euros) recorded the largest drop within the CAC 40. The aircraft manufacturer now anticipates an adjusted EBIT of approximately 5.5 billion euros and free cash flow before customer financing of approximately 3.5 billion euros. Airbus previously expected adjusted EBIT of between €6.5 billion and €7 billion and free cash flow before customer financing of around €4 billion.
The aircraft manufacturer has lowered its 2024 aircraft delivery target. It is now targeting 770 deliveries against 800 previously, to compare with a consensus of 786 and the 735 aircraft delivered in 2023. “This reduction is linked to persistent problems in the supply chain, mainly with regard to engines, aerostructures and cabin equipment,” explains Airbus.
This warning and the accompanying comments weigh on the sector: second largest drop in the CAC 40, Safran fell 4.71% to 196.30 euros while Dassault Aviation lost 3.45% to 173.40 euros.
According to Airbus CEO Guillaume Faury, the situation has “degraded in recent months,” reports Invest Securities in its note regarding this warning: “We find ourselves in a situation where there is a shortage of engines for single-aisle aircraft among 2 engine manufacturers (Pratt & Whitney and CFM International) and we would end up with gliders, aircraft without engines, by the end of the quarter in significant numbers.”
As a result, the target of 75 monthly deliveries of A320 Family aircraft is now pushed back to 2027 instead of 2026.
In addition, Airbus warned that it would record charges of around 0.9 billion euros on certain telecommunications, navigation and space observation programs in the first half. They are primarily related to updating assumptions about schedules, workload, sources of supply, risks and costs over the life of certain programs in these areas.
The strongest reaction among brokers came from Deutsche Bank, which lowered its recommendation from Buy to Hold. “The situation is reminiscent of the failure of deliveries in 2022, but it is further aggravated this time by space,” explains the broker. “Airbus gives the impression of not having full control of the supply chain. In mid-May it indicated that deliveries for the current year supported the target of around 800,” adds the analyst.
Reacting to this warning, RBC believes that “many headwinds in space and commercial activities are reflected in Airbus’ action. This analyst remains at “Outperform” on Airbus by lowering his price target from 190 to 180 euros.
For its part, Citigroup speaks of disappointment. Remaining Buy on Airbus by lowering its target price from 190 to 188 euros, the American bank reduced its profit forecasts for 2024-2027 by 12 to 19%. However, according to him, “demand remains strong and once production has caught up in 2028, his forecasts will remain essentially the same”.
For Berenberg, “the cycle of downward revision now seems to be underway”. The broker remains Sell on Airbus maintaining its price target at 119 euros. According to the analyst, this lowering of targets “will have a negative effect on the market’s multi-year forecasts and on the perceived intrinsic valuation of stocks.”
Remaining Neutral on Airbus, UBS believes that “the new Ebit forecast is equivalent to the middle of the old range, once deteriorations in deliveries and space activity are taken into account”. As a result, the analyst now expects Ebit of 5.4 billion euros in 2024.
Airbus’ half-year results will be revealed on July 30.
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