* FY op profit up 60 pct to 386 mln eur vs consensus 371 mln
* Operating margin 14 pct, dividend up 20 pct
* Sees Q1 organic sales up 20 pct
* Confident in aero supply chain, 787 production plans
* Shares up 4.5 percent
By Tim Hepher and Cyril Altmeyer
PARIS, Nov 22 France's Zodiac Aerospace SA
offered crisis-weary investors respite with a
prediction that emerging markets would carry the high-tech
industry through the debt problems and economic uncertainties
piling up in the West.
The family-controlled company, which supplies plumbing,
power and parts for Airbus and Boeing Co
jetliners, said on Tuesday the supply chain was robust enough to
keep up with record production needed to meet demand in the
Middle East and Asia.
"We hear worries about the international economy, but when
we look at our (fiscal) first quarter which closes next week, we
are still up 20 percent in like-for-like revenues, just like the
previous quarter," Chairman and Chief Executive Olivier
"When we listen to our clients and to Airbus, and to a
lesser extent Boeing, their main concern is whether the supply
chain can support the increases in production rather than
anything else," he told analysts.
Zarrouati added that the increase in production would not be
costly for the company in terms of industrial investment and
that the supply chain would be able to keep up with Airbus and
Boeing as they increase production.
Investors agreed, pushing up Zodiac shares as much as 8
percent after the Paris-based company reported
higher-than-expected 2010/11 results and promised further
The role of Asia in lifting the aerospace industry out of
the malaise experienced by much of the rest of the economy was
highlighted last week when U.S. President Barack Obama oversaw
the provisional sale of 230 Boeing jets to Indonesia's Lion Air.
The growing jetliner fleet also promises sales of spares and
Zodiac said it would beat its target of boosting revenue 40
percent over three years. It hiked its dividend 20 percent.
At 1200 GMT, Zodiac shares were up 4.5 percent at 55.2
euros. They have fallen just 6 percent this year compared with a
23 percent drop in the broad French SBF120 index.
RAMPING UP PRODUCTION
Zarrouati, whose company repelled a takeover approach from
state-controlled Safran SA a year ago, said he did not
believe "for a second" that emerging markets would stop growing.
And despite industry concerns in France that some of the
country's smallest suppliers could be hit by a squeeze on French
bank lending due to the euro zone debt crisis, he said surveys
of suppliers had shown nothing to be too worried about.
Airbus and Boeing are ramping up production of their
best-selling narrow-body models to record levels to cope with
the backlog in demand from Asia and the Middle East.
Europe's Airbus has, however, expressed concerns about the
fragility of a network of hundreds of suppliers and appealed to
French banks to keep lending to small companies that lack access
to alternative sources of finance.
Production of Boeing's newest model, the 787 Dreamliner, was
hit by recent problems in the planemaker's global supply chain.
Zarrouati expressed confidence in Boeing's ability to
increase output of the carbon-fibre plane to 10 planes a month
by the end of 2013 from 2.5 a month now, a target widely seen as
challenging after three years of delays.
He said Zodiac was ready to support the goal but told
Reuters the company's revenue planning assumed a lower total
than Boeing's projections, for the sake of prudence.
Zodiac sells $2.5 million in items from escape slides to
windshield wipers for each Dreamliner. That excludes seats,
which airlines buy directly from the supplier. Zodiac made the
seats for the first 787 operated by All Nippon Airways.
For the 12 months to Aug. 31, Zodiac reported a 60 percent
rise in operating profit to 386 million euros and an operating
margin of 14 percent, up from 11.2 percent in 2009/10. Net
profit grew by the same amount to 238 million euros.
Analysts had on average expected full-year operating profit
of 371 million euros, equating to an operating margin of 13.5
percent, and net profit of 237 million. Zodiac had targeted an
operating margin of more than 13 percent.
Zodiac had already reported a 28 percent rise in 2010/11
sales to 2.75 billion euros, partly fuelled by acquisitions,
with revenue up 17.3 percent on a like-for-like basis.
Zodiac bought German cabin interiors company Sell in 2010.