Dassault foresees drop in production next year

 - May 7, 2008, 7:34 AM

Dassault Aviation chairman and CEO Charles Edelstenne is “satisfied” with the business and military aircraft manufacturer’s financial performance for the first half of this year. Conceding that there has been a fall in the highest segment of the business aircraft market, Edelstenne noted that “our rivals have suffered more than Dassault from the downturn.” But Edelstenne is concerned that the “international macro-economic environment” on which civil aircraft production relies is “not conducive” to Dassault’s maintaining its production rates next year.

He expects next year to be “difficult,” with anticipated results slightly down from what is expected for this year. The Dassault executive said that after honoring present customer delivery requirements of Falcon business jets, the group next year will be reducing aircraft deliveries from the current six per month to five. This, Edelstenne explained, could rise or fall “depending on what happens in the market because of the world economic crisis.”

Dassault Aviation in the first half of this year booked orders worth e2.39 billion ($2.34 billion), a 24-percent hike compared with the first six months of last year. Falcon business jets accounted for 81 percent of revenue expected from first-half orders, with military aircraft making up the remainder. Edelstenne said 83 percent of first-half orders were for export. Consolidated sales for the first half of this year totaled e1.47 billion ($1.44 billion) compared with e1.61 billion ($1.58 billion) for the corresponding period last year. Seventy-two percent of sales (meaning deliveries, as opposed to orders for future delivery) in the first half of this year were for Falcons and 28 percent for the defense sector. Three-quarters of the orders were exported. The group’s consolidated net profit came to e145 million ($1.42 million), a 15-percent increase, despite slightly lower revenues, thanks to higher productivity and a better than expected exchange rate for the U.S. dollar.

Though worried about next year, Edelstenne is “confident” in the future. Dassault has an order book worth e10.89 billion ($10.67 billion). In financial terms, Dassault’s Falcon business jets accounted for 38 percent of the order book, French defense orders 32 percent and export defense 30 percent. Between January and press time Dassault logged firm orders for 75 Falcons–five more than announced at the NBAA show in September. Those orders include contracts on 28 Falcon 7Xs signed in the first three months of this year. Thirty Falcons were delivered in the first six months of the year, four fewer than in the first half of last year. For the first time since 1998 none of the Falcon orders was from NetJets. NetJets accounted for 34 of the 73 Falcons ordered last year.

Edelstenne said Dassault is still considering launching a new midsize Falcon business jet.