• Revenues: € 9.1 billion - up 30 percent
  • EBIT*: € 780 million - up 19 percent
  • Net Income: € 516 million - up 26 percent

EADS (stock exchange symbol: EAD), a global leader in aerospace, defence and related services, strongly improved its financial performance in the first quarter of 2006 compared to the same period in 2005. From January to March 2006, the company increased revenues by 30 percent to € 9.1 billion (Q1 2005: € 7.0 billion) and achieved an EBIT* (pre-goodwill and exceptionals) of € 780 million, up 19 percent (Q1 2005: € 657 million). EADS confirmed its positive outlook for the financial year 2006.

Strong revenue increase and EBIT* improvement

EADS revenues grew 30 percent to € 9.1 billion during the first three months of 2006 (Q1 2005: € 7.0 billion). Increases were achieved at the Airbus, Eurocopter, Military Transport Aircraft and Defence & Security Systems Divisions. Combined revenues from EADS defence businesses amounted to € 2.0 billion (Q1 2005: € 1.3 billion) which includes € 0.5 billion for an A400M revenue recognition that was initially scheduled for the fourth quarter of 2005.

EBIT* improved in all Divisions compared to the first quarter of 2005. While Airbus increased its aircraft deliveries (101 versus 87), further profit growth at Space, Eurocopter, Defence & Security Systems as well as the Military Transport Aircraft Divisions contributed to strong performance in the first quarter. EBIT* grew in spite of a less favourable hedge rate of € 1 = US$ 1.09 (Q1 2005: € 1 = US$ 0.98) and higher Research & Development (R&D) expenses. The EBIT* margin amounted to 8.6 percent.

In the first quarter of 2006, self-financed R&D expenses accounted for € 536 million (Q1 2005: € 422 million). This increase was mostly due to Airbus’ programme development and is consistent with plan.

R&D capitalisation remained nearly stable (€ 56 million) compared to the same period of the previous year (Q1 2005: € 52 million).

Net Income up 26 percent – Net Cash position up again

EADS’ Net Income rose 26 percent to € 516 million (Q1 2005: € 410 million), or € 0.65 per share (Q1 2005: € 0.52). This increase is the result of the Group’s good EBIT* performance in the first quarter of 2006. Net Income was strengthened by the favourable effective tax rate but was weakened by the Other Financial Result due to the deterioration of the closing €/US$ spot rate at the end of March 2006 compared to December 2005.

Free Cash Flow including customer financing stood at € 363 million, thanks to sell-downs of aircraft financing exposure (Q1 2005: € 641 million). Free Cash Flow before customer financing amounted to € -67 million (Q1 2005: € 704 million). The reduction compared to the same period of 2005 mainly resulted from lower advance payments on key defence programmes. At the end of March 2006, the Net Cash position stood at € 5.9 billion (year-end 2005: € 5.5 billion).

Order Intake up 18 percent

Reflecting business successes across the Group, EADS’ order intake amounted to € 10.5 billion in the first three months of 2006 (Q1 2005: € 8.9 billion). This represents an increase of 18 percent and exceeded revenues in the period. The strong momentum in order intake was mainly supported by Military Transport Aircraft, Eurocopter and Space Divisions.

At the end of March, EADS’ order book remained solid at € 248.6 billion (contributions from commercial aircraft activities based on list prices). The order book decreased slightly versus year-end 2005 due to the impact of a less favourable €/US$ exchange rate. The Group’s defence order book stood at € 52.0 billion as of 31 March 2006 (year-end 2005: € 52.4 billion).

Outlook 2006: Ongoing growth confirmed

EADS confirms the outlook for 2006 that was published on 8 March 2006.

EADS expects its 2006 revenues to grow to more than € 37 billion (FY 2005: € 34.2 billion), powered by the over 10 percent increase of Airbus deliveries and higher volume from its combined defence businesses. EADS uses a planning rate of € 1 = US$ 1.30.
EBIT* is expected to grow to between € 3.2 billion and € 3.4 billion (FY 2005: € 2.85 billion) reflecting the higher volume at Airbus, but also due to better operational efficiencies across all divisions (including Route06 cost saving programme), however partially offset by higher than expected losses at Sogerma and the continuing US Dollar headwind arising from the maturity of less attractive hedges. In light of the above, EADS confirms its 2006 EBIT* guidance. The EBIT* guidance, as a range, recognizes the existence of contingencies for risk which can only be adjusted as the year progresses.

Free Cash Flow before Customer Financing is expected to remain robust in 2006, despite the build up of inventories related to the delivery ramp-up, particularly for the A380.

2006 EPS is expected to grow to between € 2.35 and € 2.55 (FY 2005: € 2.11), based on an expected average of around 795 million shares, and taking into account a US Dollar year-end closing rate similar to 2005.

This outlook does not reflect further impact of a potential exercise of BAE Systems’ put option regarding its 20 percent stake in Airbus.


* EADS uses EBIT pre-goodwill impairment and exceptionals as a key indicator of its economic performance. The term “exceptionals” refers to such items as depreciation expenses of fair value adjustments relating to the EADS merger, the Airbus Combination and the formation of MBDA, as well as impairment charges thereon.