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DASA REPORTS SOLID BALANCE SHEET
by Norbert BurgnerDaimler-Benz Aerospace is reporting "pleasant business developments". After finding themselves in the red for the last three years, the company is able to boast profits in the three-digit-Million-Mark-range for 1997.
The aviation and space flight section of the Daimler-Benz AG announce that all areas of the company are in profit. According to Manfred Gentz, member of the executive committee at Daimler-Benz and responsible for finances and controlling, Dasa, (Daimler-Benz Aerospace), managed to increase the company's operating profit from a loss of 196 million Marks to a plus of 432 million Marks. Turnover had grown by 20 per cent, (from 12.7 to 15.3 billion Marks).
Commercial aircraft made a decisive impact on the company's growth with a turnover of 30 per cent, (from 4.6 to 5.97 billion Marks). The propulsion sector increased its turnover by 28 per cent, (from 2.311 to 2.963 billion Marks).
The company has been successful, although the subsidies, which the German Government had made available for the development of the A320 family, had been repaid early. The competition initiative "Dolores", which made it possible to lower coats by almost 30 per cent, and the good exchange rate for the US dollar, contributed to Daimler-Benz's success.
In addition, as Dasa puts it, the favourable economic environment also had a positive effect. As Dasa states in its business report, the aviation and space travel industry has developed positively. Aviation has grown throughout the world. The growth rates are particularly high in the Asian-Pacific region, as they have been in previous years, followed by Europe and the USA.
In the last quarter this development slowed down because of the economic crisis in the Far East. The local airlines were hit particularly hard.
But in all international airlines were able to consolidate or even improve their profitability. Plane manufacturers received orders for 1,030 planes, with a seating capacity of over 100 seats. The record of 1,088 units, which were ordered in 1996, was almost matched. This is why the amount of orders has grown to a total of 2,750 units in 1997.
Better use of all capacities made it possible to increase the output of 397 planes in 1996 to 557 planes in 1997. By the end of current year Dasa is expecting to deliver 800 planes.
Hardly any orders were cancelled, (only 88 as opposed to 190 in the previous year). Because of the crisis in the Far East, there will most certainly be more cancellations, at best delivery dates might possibly have to be postponed.
Dasa is confident that as far as the construction of military aircraft is concerned, prospects are a lot better since Great Britain, Germany, Italy and Spain ratified an agreement in support of the Eurofighter.
The helicopter market has managed to pick up and overcome the low of 1995.
As well as plane constructors, engine manufacturers have also profited from the recent positive developments.
Additionally the US dollar has gained in value, it grew 15 per cent compared with the Mark last year.
Public funding for space programs was cut by comparison with the previous year. Although spending on the ISS (International Space Station) and Ariane 5 has been increased, new projects in the area of scientific satellites have not been started. Only those programs which were already running have been continued. As far as the global commercial satellite and carrier markets are concerned, the upward trend has continued as a result of the rapidly growing demand for telecommunication services.
In the defence industry, restrictions on spending and the lack of funds for investment have been noticeable.
Overall positive business developments have resulted in an increase in capital return of minus 3.4 per cent to plus 7.7 per cent.
The operating profit of +222 as opposed to -443 million Marks mentioned initially, is a result of finances, tax on profits and foreign investments. The operating capital components of the finances, are added to the operating profit. According to the business report, this is made up of the result of Airbus Industries, interest on down payments and burdens from company intern administration costs. Daimler-Benz Aerospace boasts an improvment in operating profit of 628 million Marks resulting in 432 million Marks.
The net income decreased from 1.2 billion Marks in 1996 to only seven million Marks for the last year. According to Dasa the reason for this is considerably lower tax revenue from the American audit, which requires different tax calculations.
Furthermore, since the value of the US dollar increased, one had to cope with additional financial burdens, because the exchange rate had to be secured.
The recorded cashflow was 524 million Marks in 1997. The result would have been better, if Dasa did not have to repay development subsidies for the A-320 Airbus over 1.443 billion Marks. According to Dasa Boss Manfred Bischoff this is why the poor result of the Daimler-Benz Aerospace Airbus GmbH (Hamburg) with a loss of 620.5 million Marks has reduced profits.
Some companies voluntarily indicate how much money has gone into and out of the business after tax, (net solvency surplus), via a capital fluctuation report. This cash flow makes it easy to gauge the success of a joint-stock company and is becoming more and more popular.
The cash flow of Dasa's investment activities reached a value of -382 million Marks in 1997. The capital flow of -710 million Marks is said to be influenced mainly by moneys that had to be paid to the Daimler-Benz AG.
Dasa's overall solvency has reduced by comparison with the previous year from 568 million Marks to 10.8 billion Marks. It is, however, still very respectable.
For the current year Dasa's business is doing very well. During the first quarter turnover of Daimler-Benz's aviation and space flight business has increased by 17 per cent to 3.309 billion Marks, (2,827 billion Marks for the same period of time in 1997).
According to the company's interim report, orders for the first three months of this year are extraordinarily high, (6.7 billion Marks as opposed to 2.6 billion Marks last year). The preparation of the Eurofighter's serial production (approx. two billion Marks) contributed to this on the one hand. On the other hand the Latin America placed the second biggest order in the Airbus history, (90 orders for A319/320 as well as 89 optional orders). Significantly more orders for satellites, engines and helicopters have gone in.
For the entire year 1998 Dasa Boss Manfred Bischoff expects a turnover of 16 billion Marks and he hopes to reach the capital return of 12 per cent, a target, that the parent company has set. According to prospective figures, which were first made public in Stuttgart, the company intends to increase its turnover to 18 billion Marks until the year 2000.
From page 24 of FLUG REVUE 6/98
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