Arab Today, arab today bae and eads hold steady year after failed merger
Last Updated : GMT 07:53:25
Arab Today, arab today
Arab Today, arab today

BAE and EADS hold steady year after failed merger

Arab Today, arab today

Arab Today, arab today BAE and EADS hold steady year after failed merger

Paris - AFP

A year on from the failed merger of British defence firm BAE Systems and French aerospace company EADS, shareholders are unlikely to have noticed a difference but the companies' fortunes may yet diverge, analysts believe. Talks between the two companies had aimed at combining BAE's drive for profits and globe-reaching customer base with the commercial might of EADS' successful Airbus to create an industry leader. But after objections from government stakeholders, notably Germany, the tie-up was abandoned in October 2012. Since then, the fortunes of both firms have been largely positive even though an announcement of cutbacks last week at BAE could give the impression things were looking sour. The Britain-based giant announced it will axe 1,775 jobs and close the historic Portsmouth shipbuilding yard in Britain. But Philippe Plouvier of Roland Berger strategy consultants said the Portsmouth closure only reflected hard business logic on the part of BAE, designed to preserve shareholders' interests. "BAE's strategy has always been to tell the British government: 'If you don't place an order, I shut down the production sites'," he said. "When the government ordered armoured land vehicles from General Dynamics in the US, BAE immediately closed down all its land defence sites in Britain," he recalled. BAE's continued survival without being gobbled up by a rival is remarkable given the alarming predictions being made at the time. "After the collapse of the merger with EADS everybody was of the opinion that BAE was in dire straits," said Tom Chruszcz, an analyst with Fitch Ratings. It was "just a question of time before somebody would buy them out," he added, but "one year on, nothing has happened." However, Chruszcz believes that BAE may yet be in danger because it is "heavily exposed to the defence sector, particularly in the US", which accounted for 40 percent of their revenue at the end of 2012. At a time of government cutbacks, especially in defence as operations in Iraq and Afghanistan wind up, "that revenue basis is shrinking and becoming ever more challenging," he said. Meanwhile, EADS has rebounded in a spectacular fashion following two key decisions by Tom Enders, the company's chief executive. Enders has persuaded France, Spain and Germany to remove themselves from the day-to-day running of the company, and intends to restructure EADS to merge its space, defence and military aircraft divisions to mitigate exposure to government budget cuts. EADS has abandoned a previous goal of balancing civilian and military revenue, but says the new division, to be named Airbus Defense and Space, will still be the tenth-largest defence company in the world. Its share price has almost doubled in a year and reached a historic high of 50 euros on the Paris market this month. Enders wants to increase the group's competitiveness to take its operating profit margin to 10 percent, the figure currently enjoyed by none other than BAE. "BAE's ambition is to maintain its margin, and preserve its capacity to generate cash flow so that it can go on distributing dividends," said Christophe Menard, analyst with Kepler Chevreux. But Guy Anderson, a senior analyst at IHS Jane's, said reducing costs alone was not sustainable for BAE. "Is dividend distribution on the back of cost cuts a sustainable long-term strategy? Not alone, no. "We'd expect BAE to continue its push into emerging markets to offset some declines in the West, and to build on its position in adjacent markets like cyber-security." That won't be enough to offset the budget cut-backs seen in recent years in the United Kingdom and the United States, Anderson conceded. But he doesn't think that the decline is irreversible, given the cyclical nature of defence markets. "The boom years of the 2000s certainly weren't foreseen during the defence spending drought of the 1990s. Strategic realities change," he said.

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

Arab Today, arab today bae and eads hold steady year after failed merger Arab Today, arab today bae and eads hold steady year after failed merger

 



Arab Today, arab today
Arab Today, arab today Fadi Kataya explains secrets of  Nancy Ajram's newlook
Arab Today, arab today Messi visit will contribute in tourism

GMT 14:04 2017 Friday ,24 February

Messi visit will contribute in tourism
Arab Today, arab today Expresses Algerian history by woody figures

GMT 13:26 2017 Friday ,24 February

Expresses Algerian history by woody figures
Arab Today, arab today Iran complying with nuclear deal

GMT 07:14 2017 Saturday ,25 February

Iran complying with nuclear deal
Arab Today, arab today Zainab al-Maliki reveals herTV presenter models

GMT 18:12 2017 Friday ,24 February

Zainab al-Maliki reveals herTV presenter models

GMT 10:47 2017 Thursday ,23 February

Saudi Aramco may offer discounted shares to citizens

GMT 06:25 2017 Thursday ,23 February

Bupa Arabia sponsors SMEA forum

GMT 06:11 2017 Thursday ,23 February

Football: Turkish company wins Qatar World Cup contract

GMT 05:46 2017 Thursday ,23 February

SABIC net profits fall in 2016

GMT 21:01 2017 Wednesday ,22 February

Saudi Aramco mulls offering citizens discounted shares

GMT 16:50 2017 Wednesday ,22 February

Yahoo salvages Verizon deal
View News in Arabic - Business: أخبار الشركات
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Reading therapy relieves mental disorders

GMT 15:39 2017 Friday ,24 February

Reading therapy relieves mental disorders
Arab Today, arab today UK appoints 1st Scotland Yard chief in 188 years

GMT 05:14 2017 Thursday ,23 February

UK appoints 1st Scotland Yard chief in 188 years
Arab Today, arab today Ex-yoga missionary unleashes rage

GMT 12:16 2017 Thursday ,23 February

Ex-yoga missionary unleashes rage
Arab Today, arab today Pluto's unruly moons

GMT 06:31 2015 Thursday ,04 June

Pluto's unruly moons
Arab Today, arab today Tesla back into red but revenue grows

GMT 07:27 2017 Thursday ,23 February

Tesla back into red but revenue grows
Arab Today, arab today Nissan enhances sales in most markets

GMT 14:08 2017 Monday ,20 February

Nissan enhances sales in most markets
Arab Today, arab today Actress Lobna Abdel Aziz proud of her career

GMT 06:08 2017 Thursday ,23 February

Actress Lobna Abdel Aziz proud of her career
Arab Today, arab today Milan laughs while Rome cries

GMT 10:28 2017 Wednesday ,22 February

Milan laughs while Rome cries

GMT 07:36 2017 Wednesday ,22 February

Wafaa Amer is happy for Sherihan’s return

GMT 12:35 2017 Tuesday ,21 February

63-Year-Old Woman Delivers Baby

GMT 22:42 2017 Thursday ,23 February

Nasima Gamei revives heritage in jewelries

GMT 15:53 2017 Tuesday ,21 February

Small ponds have outsized impact

GMT 20:33 2017 Friday ,17 February

To release new antiques collection

GMT 07:51 2017 Wednesday ,22 February

Mom's immune system accepts babies

GMT 09:59 2017 Monday ,20 February

Tourism shows signs of recovery

GMT 13:12 2015 Saturday ,09 May

Sheikh Sultan opens Sharjah Centre

GMT 20:02 2017 Tuesday ,21 February

Nohan Seyam designs beautiful accessories
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday