(Bloomberg) -- Airbus SE reported a drop in first-quarter profit as the European planemaker paid a price for stubborn gaps in its supply chain that have held back jet deliveries.
Adjusted earnings before interest and taxes fell to €773 million ($854 million) from €1.26 billion in the first three months of 2022, Airbus said in a statement. Sales dipped to €11.8 billion from €12 billion. The manufacturer stood by its full-year targets for cash flow and aircraft deliveries, though the company pushed back the entry into service date of its A350 freighter version by a year to 2026.
The world's largest planemaker has struggled to meet soaring demand for aircraft as travel rebounds from the Covid-19 pandemic. Suppliers contending with the residual impact of the global health crisis are still short of workers and can't meet Airbus's demand for components ranging from seats to semiconductors to raw materials. That's sapped profit and cash flows, because Airbus recognizes revenue only when a plane is delivered.
“We continue to face an adverse operating environment that includes in particular persistent tensions in the supply chain,” Chief Executive Officer Guillaume Faury said in the statement. “We remain focused on delivering the commercial aircraft ramp-up and longer-term transformation.”
Foreign-exchange movements also squeezed profit. Airbus receives revenue in dollars, which have been falling in value against the euro, the currency that makes up the bulk of its expenses. Airbus said it had taken a charge of €360 million related to a dollar pre-delivery payment mismatch and balance sheet revaluation.
The company had negative free cash flow of about €889 million, compared with positive free cash flow of €213 million a year earlier, which it attributed to inventory build-up as it prepares to ramp up production.
Shipments totaled 127 planes in the first quarter, a 9% drop from a year earlier, leaving Airbus to lag behind Boeing Co. for the first time in almost five years. Bloomberg reported earlier on Wednesday that Airbus deliveries fell to about 55 jets in April from March, making it harder for Faury to reach his goal of 720 handovers this year. The company didn't provide a figure for its April deliveries in the earnings release.
The supply constraints could last until the end of 2024 or even into 2025, putting pressure on the planemaker's ambitious production ramp-up of its best-selling A320neo family to 75 a month by 2026.
In January, Toulouse, France-based Airbus forecast an about 7% increase in adjusted earnings before interest and tax to €6 billion for all of 2023. It expects free cash flow before some items to drop to €3 billion from €4.7 billion.
(Updates with comment from CEO in fourth paragraph.)
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