back 
The year was marked by strong volatility due mainly to 
hedge fund activity, especially in the second quarter. Speculative trading led to average volumes of more than twice those in 2005. After three years of appreciation, EADS was the worst performer in both the CAC 40 and the MDAX during 2006, with an 18% share price slide.
On the back of 2005’s strong momentum, the share price surged to an all-time peak of €35.42 at the end of March, lifted by Airbus’s record commercial year, the excellent 2005 performance and the apparently positive outlook at the time.
Share price evolution as of 31st December 2006 (close price)
Under question
At the beginning of April, Lagardère and DaimlerChrysler announced their decision to reduce their shareholding in the Group by 7.5%, causing a temporary imbalance in supply and demand and an increase in the free float. Almost simultaneously, BAE Systems announced its intention to sell its 20% stake in Airbus, provoking market uncertainty.
Then, confusion in the financial community mounted following the Thales-Alcatel Space partnership and negative customer feedback about the A350 and the A340’s cost of operations. Over the two months of April and May, the share price lost approximately 20%, and not even the good first quarter earnings could alleviate these concerns.
On 13th June, delivery delays were suddenly announced for the A380. The following day, the EADS share price dropped by more than 30% with a huge trading volume of 68.5 million of shares – 8% of the capital was exchanged during the day.
Stabilisation
By July, after changes in top management that included the appointments of Louis Gallois and Christian Streiff, as well as the announcement of the new A350XWB, the situation began to stabilise. This did not, however, diminish distrust among investors over the uncertainty regarding EADS’ financial outlook, with a share price stuck at around €22–23.
The unexpected purchase of 5.4% of the share capital by the Russian state-owned bank Vneshtorgbank through the summer fuelled further speculative share trading.
Then, against the backdrop of a further A380 delay announcement and, following a thorough review, the unveiling of the Power8 plan in early October, the situation began to improve. Further clarification of the management and, in early December, the results of the A400M programme review and the launch of the A350XWB slowly lifted some of the financial community’s doubts.
Comforted by the continuous stream of orders for Airbus, new investors focused on the Company’s value and on its long-term prospects. They acquired stakes in the capital, stabilising the share price and filling the void left by investors focused on short-term growth and performance. In December, the share price rose by more than 15% to €26.
Profile
ISIN Code NL0000235190
Number of issued shares as of 31st December 2006: 815,931,524
Offer price on 10th July 2000: €19 for institutional investors, €18 for retail investors
High in 2006 on Paris Stock Market: €35.42 on 27th March
Low in 2006 on Paris Stock Market: €16.75 on 14th June
 Further information |
|
* |
On 4th April 2006, DaimlerChrysler AG and Lagardère SCA announced the entry into simultaneous transactions aiming at reducing their respective stakes in EADS by 7.5% each in coordinated steps. |
|
** |
On 6th April 2006, Lagardère issued mandatory exchangeable bonds. The EADS shares deliverable at the maturity of the bonds will represent a maximum of 7.5% of the share capital of EADS. At the last maturity date of the bonds – in 2009 – the SOGEADE stake will be in line with DaimlerChrysler AG’s stake. |
|
*** |
Independently of the 2006 movements, on 9th February 2007, DaimlerChrysler reached an agreement with a consortium of private and public-sector investors by which it will reduce its shareholding in EADS by 7.5% indirectly. This movement will not affect the voting rights of DaimlerChrysler. |
