• Revenue growth to € 19.0 billion (H1 2005: € 16.0 billion)
  • EBIT* growth to € 1.6 billion (H1 2005: € 1.5 billion)
  • Airbus expects to deliver a record of 430 aircraft in 2006
  • Breakthrough in US defence market
  • New management in place to address challenges
  • Full-year outlook might be affected by non-recurring charges

EADS (stock exchange symbol: EAD) delivered solid results in the first half of 2006, while tackling operational issues associated with the A380 delivery schedule, establishing the all-new A350 XWB aircraft family, and addressing changes in the Group’s top management. From January to June 2006, the company benefited from the positive development of its growing markets and increased its revenues across all Divisions by 18 percent to € 19.0 billion (H1 2005: € 16.0 billion) and achieved an EBIT* (pre-goodwill and exceptionals) of € 1.6 billion, up six percent (H1 2005: € 1.5 billion).

The Group’s US growth strategy received strong backing with the US Army’s recent selection for up to 322 UH-145 helicopters. This will mark EADS’ breakthrough in the US defence market. Thanks to its good commercial background, Airbus expects to deliver 430 aircraft for the full year.

The increase in EADS revenues to € 19.0 billion (H1 2005: € 16.0 billion) was achieved across all Divisions, in particular Airbus, Military Transport Aircraft and Eurocopter. The Airbus contribution to the Group’s increased revenues resulted mainly from higher aircraft deliveries reaching record of 219 (H1 2005: 189). Revenue growth in the Military Transport Aircraft Division was supported by higher revenue recognition in the A400M programme, while Eurocopter benefited from strong commercial momentum leading to a volume increase. The combined revenues from EADS defence businesses amounted to € 4.1 billion (H1 2005: € 3.1 billion). As in previous years top and bottom line contribution from the defence, helicopter and space businesses is much stronger in the second half of the year.

EBIT* increases compared to the same period of 2005 came from positive volume effects and ongoing EBIT* improvements in all Divisions. EBIT* grew to € 1.6 billion (H1 2005: € 1.5 billion), despite the strong Dollar headwind with hedges maturing at an average rate of € 1 = US$ 1.08 (H1 2005: € 1 = US$ 1.01), EADS Sogerma Services charges, additional costs related to the revised A380 delivery schedule and increases in Research & Development (R&D) expenses. The EBIT* margin amounted to 8.6 percent. In the first half of 2006, self-financed R&D expenses amounted to € 1,139 million (H1 2005: € 950 million). This increase was mostly due to the development costs on the A350 programme. The five percent rise in EADS’ Net Income to € 1,043 million (H1 2005: € 992 million), or € 1.31 per share (H1 2005: € 1.25) reflects the Group EBIT* increase being partly offset by finance costs.

Free Cash Flow including customer financing stood at € 319 million
(H1 2005: € 1,581 million). The reduction compared to the same period of 2005 is mainly due to reduced contribution from pre-delivery payments and partly offset by a positive effect from customer financing. Consequently, Free Cash Flow before customer financing amounted to € -216 million (H1 2005: € 1,477 million). At the end of June 2006, the Net Cash position stood at € 5.3 billion (year-end 2005: € 5.5 billion).

In the first six months of 2006, EADS’ order intake amounted to € 14.2 billion (H1 2005: € 25.4 billion). Airbus received less orders compared to the same period of 2005 when the aircraft manufacturer had an all-time record order intake over the full-year. Nevertheless the Group’s order intake benefited from a strong order flow at Space and Eurocopter. Both Divisions achieved an outstanding order intake which was supported by various satellite orders and enormous growth in the light commercial helicopter business.

At the end of June, EADS’ order book stood at € 234.5 billion
(year-end 2005: € 253.2 billion). Contributions from commercial aircraft activities are based on list prices. The order book decreased versus year-end 2005 mainly due to an impact of around € 12 billion from a less favourable €/US$ exchange rate. The Group’s defence order book stood at € 51.1 billion as of 30 June 2006 (year-end 2005: € 52.4 billion).

Outlook 2006

Based on the achievements of the first half of 2006 and the momentum created in Farnborough, EADS expects strong commercial activities to continue throughout 2006. This healthy market forms the background to EADS’ upgraded expectation for Airbus deliveries, now set at 430 aircraft in 2006, for EADS revenues well over € 37 billion for the year, and it supports further growth in the years beyond.

The EADS first half-year earnings are consistent with a year-end EBIT* of about € 3.2 billion, and EPS of around € 2.35 (taking into account a US Dollar year-end closing rate similar to 2005) at the lower end of EADS’ initial outlook. This outlook, incorporating many moving parts since last May, takes into account the financial effects of the revised A380 delivery schedule and assumes charges for the partial disposal of EADS Sogerma Services.

Through the remainder of the year, certain topics are likely to affect this outlook. EADS expects that upon the industrial launch of the A350 XWB aircraft family, the Group will have to assess the costs and benefits related to previously signed A350 contracts, which may result in non-recurring charges. Furthermore, the EADS review of the A380 engineering, development and ramp-up schedule including possible consequences on other programmes may also lead to the recognition of further expenses. In parallel, Airbus’ management is committed to tackle the challenges posed by the weakened US Dollar and to lay a stronger foundation for future development, and it is preparing to instigate a new competitiveness programme to that effect. Finally, the outcome of the EADS Sogerma Services restructuring, warranties and social package is not final.

EADS expects that Free Cash Flow before customer financing will be positive for the full year.



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.