• All key indicators above guidance
• Order intake increased 81 percent to € 83.1 billion, driven by Airbus Commercial
• Revenues up 7 percent (€ 45.8 billion) with record deliveries of
510 commercial aircraft
• EBIT* before one-off: € 1.3 billion
• Free Cash Flow of € 2.7 billion, much stronger than expected
• Return to dividend, proposal of € 0.22 per share
• Net income: € 553 million (EPS € 0.68 per share)
• Record net cash position of € 11.9 billion
EADS’ (stock exchange symbol: EAD) annual results of the Group’s 10th anniversary year 2010 demonstrate significant achievements supported by the recovery of the macro-economic and commercial environment which was stronger than expected. Institutional markets including helicopters, defence and public budgets still have to be monitored as well as potential risks linked to oil and commodity prices, air traffic in North Africa and continued currency issues. In 2010, the order intake(4) amounted to € 83.1 billion, driven by improved momentum in commercial aviation. EADS’ order book of more than € 448 billion provides a solid platform for future deliveries. Revenues reached a new high at € 45.8 billion. Likewise, profitability and cash performance were better than expected. The EBIT* before one-off of € 1.3 billion benefited from the better underlying performance than expected in Airbus legacy programmes and other core business activities. The reported EBIT* amounted to € 1.2 billion. The Net Cash position of € 11.9 billion is higher than anticipated, thanks to better cash management and higher order intake. It is a key asset to foster future growth.
“2010 was a year of significant progress for EADS. Commercial aircraft orders exceeded expectations and our cash flow generation was excellent. We took huge steps forward in managing and controlling key programmes: A400M has been substantially de-risked and A380 production is improving steadily”, said Louis Gallois, CEO of EADS. “At the same time, we are paying the closest attention to the A350 programme, to the evolution of defence and space budgets and to the recovery of the helicopter market. After take-off into our second decade of operations, a key priority for us now is to further improve profitability in future years to lay a solid foundation for sustainable growth.”
In 2010, EADS’ revenues increased 7 percent to € 45.8 billion (FY 2009: € 42.8 billion) thanks to growth from both volume and mix effects across core businesses, reduced by a negative foreign exchange impact of around € 500 million. Physical deliveries remained at a high level with 510 aircraft at Airbus Commercial, 527 helicopters at Eurocopter and the 41st consecutive successful Ariane 5 launch. The percentage-of-completion methodology was resumed on the A400M programme based on the allocation of internal milestones. This has resulted in revenues of around € 1 billion being booked on the programme with zero margin due to the associated provision utilisation. The Customer Nations and EADS have concluded negotiations on the overall A400M discussions. Following the approval in France and Germany, negotiations on the export levy facility (ELF) scheme are to be finalised with some Customer Nations and are targeted for completion in 2011. In the meantime, the programme is delivering results with four development aircraft flying. The A400M maturity gate milestone was passed in February 2011, which clears the way for the start of series production.
Civil certification is planned for 2011.
EBIT* before one-off (adjusted EBIT*) – an indicator capturing the underlying business margin by excluding non-recurring charges or profits caused by movements in provisions or foreign exchange impacts – stood at € 1.3 billion (FY 2009: € 2.2 billion) for EADS and at around € 280 million for Airbus. It benefited from good underlying performance in all core business activities in the Divisions, especially the Airbus legacy programmes. Compared to 2009, EBIT* before one-off was weighed down by the deterioration of hedge rates (FY2009: ~ € 1 = $ 1.26 versus FY2010: ~ € 1 = $ 1.35). As expected, A380 continues to weigh significantly on the EBIT* before one-off.
EADS’ reported EBIT* stood at € 1,231 million (FY 2009: € -322 million). In 2010, EADS has further refined its natural hedging strategy, impacting reported EBIT* and other financial result but with no impact on EBIT* before one-off and Net Income.
Net Income amounted to € 553 million (FY 2009: € -763 million), or earnings per share of € 0.68 (earnings per share FY 2009: € -0.94). The finance result amounts to € -371 million (FY 2009: € -592 million). The interest result of € -99 million (FY 2009: € -147 million) mainly reflects lower interest expenses. Meanwhile, the other financial result improved considerably by around € 170 million year-on-year to € -272 million (FY 2009: € -445 million) driven mainly by lower unwinding of discounted provisions in 2010 than in 2009. The unwinding of discount mainly decreases due to lower outstanding provisions.
Based on an Earnings per Share (EPS) of € 0.68, the EADS Board of Directors proposes payment on 6 June 2011 of a dividend of € 0.22 cents per share to the Annual General Meeting of shareholders (exceptionally, due to the significant loss incurred in 2009, no dividend payment was made that year). The record date should be 3 June 2011.
“We are pleased to resume paying a dividend to our loyal shareholders. The Group’s performance in 2010 merits the proposed dividend. It is our clear ambition to gradually improve profitability in the mid-term. Profitability improvement is the key indicator for a better dividend distribution in the future,” said Hans Peter Ring, CFO of EADS.
Self-financed Research & Development (R&D) expenses reached € 2,939 million (FY 2009: € 2,825 million), driven mainly by increases at Cassidian for the Unmanned Aerial Systems (UAS) and Systems businesses and at Eurocopter across the product range. At Airbus, the increase in R&D on the A350 XWB was compensated by decreases in other programmes, especially the A380 and A330-200F.
Free Cash Flow before customer financing of € 2,644 million (FY 2009: € 991 million) is significantly above expectations thanks to better operational and inventory management performance and stronger pre delivery payments at Airbus Commercial than expected. The improvement compared to last year is driven by the working capital. At Airbus Commercial, inventory reduction is driven by delivery patterns. The inflow of advances linked to Airbus commercial activity in 2010 was stronger than expected and was above 2009, particularly in the fourth quarter, reflecting the increase in future deliveries and commercial aircraft orders. This positive effect was more than offset by lower advance payments at Astrium and Cassidian compared to the 2009 level which was driven by exceptional order intake booked that year. Due to a combination of appetite from lessors and banking market recovery, customer financing generated a positive contribution of around € 60 million compared to a 2009 outflow of € 400 million. Investing activities consumed around € 2.3 billion, mainly as investment ramps up on the A350 XWB programme. Free Cash Flow after customer financing amounted to € 2,707 million (FY 2009: € 585 million).
EADS’ Net Cash position amounted to € 11.9 billion (year-end 2009: € 9.8 billion) after a € 553 million contribution to pension fund assets. It continues to be a solid foundation for the Group’s operational needs as well as future growth.
The Group’s order intake(4) of € 83.1 billion was significantly higher than one year ago (FY 2009: € 45.8 billion), driven by the higher level of commercial aircraft orders at Airbus. Net orders of 574 aircraft include 32 A380s and 78 A350 XWB. By the end of December 2010, EADS’ order book(4) stood at a record € 448.5 billion (year-end 2009: € 389.1 billion), reflecting the improved commercial aircraft momentum. The Airbus Commercial order book also benefited from a positive revaluation impact of around € 25 billion due to the strengthening value of the U.S. dollar against the euro at the end of December 2010 compared to the end of December 2009. The defence order book stood at € 58.3 billion (year-end 2009: € 57.3 billion).
At the end of December 2010, EADS’ workforce consisted of 121,691 employees (year-end 2009: 119,506).
EADS’ 2011 guidance is based on an assumption of € 1 = $ 1.35 for average and year-end closing spot rates.
In 2011, Airbus should deliver 520 to 530 commercial aircraft and its gross orders should be above its deliveries.
EADS’ 2011 revenues should be above the 2010 revenues.
EADS expects 2011 EBIT* before one-off to remain stable compared to the 2010 level, at around € 1.3 billion. Increasing volume and price improvement at Airbus Commercial are roughly compensated by the deterioration of hedge rates, increasing R&D and less favourable mix of activities at Cassidian.
Going forward, the reported EBIT* and EPS performance of EADS will be dependent on the Group’s ability to execute on the A400M, A380 and A350 XWB programmes, in line with the commitments made to its customers.
Reported EBIT* and EPS also depend on exchange rate fluctuations.
At € 1 = $ 1.35, EADS expects 2011 EPS to be above the 2010 level of € 0.68.
Free Cash Flow is expected to be positive. It is the most volatile item and EADS will give a more precise guidance later in the year.
In 2012, the Group expects a significant improvement in its EBIT* before one off thanks to higher volume, better pricing and improvement of A380 performance at Airbus.
EADS Divisions: Strong commercial aviation uplift, headwind approaching from institutional and governmental business
Airbus’ consolidated revenues of € 29,978 million show an increase of 7 percent compared to the same period last year (FY 2009: € 28,067 million). The Airbus consolidated EBIT* amounted to € 305 million (FY 2009: € -1,371 million).
Airbus Commercial revenues amounted to € 27,673 million (FY 2009: € 26,370 million). Deliveries increased to 510 commercial aircraft, of which 508 aircraft accounted for revenue recognition (FY 2009: 498 aircraft). Compared to one year ago, Airbus Commercial revenues reflect a favourable volume and mix effect which includes a higher number of A380 deliveries. The negative impact on revenues from foreign exchange is around € 500 million. Two A330-200 aircraft were delivered under operating lease and therefore do not count for revenue and margin recognition. The remaining two Single Aisle aircraft delivered under operating lease in the first half of 2010 have now been sold down into the market, bringing total deliveries for revenues and margin recognition to 132 aircraft for the last quarter. Airbus Commercial EBIT* decreased to € 291 million (FY 2009: € 386 million). Compared to 2009, the Airbus Commercial EBIT* before one-off (FY 2009: around € 1 billion; FY 2010: around € 280 million) benefits from favourable volume and mix effects, pricing improvement net of escalation and Power8 savings. It is reduced by a hedge rate deterioration of around € 940 million, cost escalation and costs associated with business growth.
Airbus Military revenues increased to € 2,684 million (FY 2009: € 2,235 million), driven by higher A400M revenue recognition but lower revenues in Medium & Light (M&L) and Tankers. On the A400M, consistent with the return to the percentage-of-completion methodology, the internal milestones passed during 2010 have triggered revenues of around € 1 billion with zero margin due to the associated provision utilisation. Deliveries amounted to 20 M&L aircraft (FY 2009: 16 aircraft). Airbus Military EBIT* amounted to € 21 million (FY 2009: € -1,754 million, weighed down by the A400M provision). It reflects a favourable mix in M&L and Tankers.
In 2010, Airbus Commercial set another record for deliveries. The market rebound, driven by continuing appetite for growth in emerging markets, led to 644 new gross commercial orders (FY 2009: 310). 574 aircraft net orders were booked, including 32 additional A380 and 78 A350 XWB bringing the A350 XWB order total to 583 aircraft from 36 customers. The A320neo (new engine option), offering 15 per cent less fuel burn, was launched in the fourth quarter and has seen early market success. Airbus Military booked gross orders for 21 aircraft (CN235 and C-295) in 2010.
On the A350 XWB, EADS´ top risk programme, Airbus has made good progress in 2010 with the beginning of manufacturing for sub components and sub assemblies at section level; however, the time schedule remains challenging. Entry-into-Service is scheduled for H2 2013.
As expected, the A380 programme is stabilising and Airbus is making significant progress on the learning curve, leading to an improvement of the gross margin per aircraft.
The A400M programme is delivering results with four development aircraft flying. The A400M maturity gate milestone passed in February 2011 clears the way for the start of series production. Civil certification is planned for 2011. The A330-based Multi-Role Tanker Transport (MRTT) aircraft achieved civil and military certification and the UK Future Strategic Tanker Aircraft conducted its first flight.
As of 31 December 2010, Airbus’ consolidated order book was valued at € 400.4 billion (year-end 2009: € 339.7 billion). Airbus Commercial backlog, which benefited from a positive revaluation impact of around € 25 billion due to the strengthening value of the U.S. dollar against the euro at the end of December 2010 compared to the end of December 2009, accounted for € 378.9 billion (year-end 2009: € 320.3 billion) which represents 3,552 units (year-end 2009: 3,488 aircraft). The Airbus Military order book includes 241 aircraft. It increased by 10 percent to € 22.8 billion (year-end 2009: € 20.7 billion); the A400M order book has benefited from a positive adjustment to reflect the customer negotiation outcome.
In 2010, revenues for Eurocopter amounted to € 4,830 million (FY 2009: € 4,570 million). Deliveries totalled 527 helicopters (FY 2009: 558 helicopters), including 28 NH90 and 15 Tiger, double the 2009 level. The Dutch and French navies received the first NH90 naval versions. Revenues also reflect a favourable mix from higher support and governmental revenues. The Division’s EBIT* decreased to € 183 million (FY 2009: € 263 million); it was impacted by higher product investment and negative one-time effects of around € 120 million, driven mainly by the NH90 and a restructuring charge.
2010 saw the start of flight testing with the X3 high-speed hybrid demonstrator aircraft, a key focus of Eurocopter innovation strategy, along with the maiden flights of the second EC175 prototype and the Korean Utility Helicopter. Eurocopter strengthened its training and support/services capabilities during 2010 in such regions as China and India and developed a new global logistics platform in France.
The 2010 net order trend with 346 net orders registered was stable compared to 2009 (344 net orders) despite a lower level of gross orders because cancellations were lower at 49 compared to 105 in 2009. Recovery in the civil market is slow, in particular due to the high number of second-hand helicopters in the market. Eurocopter has proactively started to adapt to this challenge with its SHAPE programme launched in early 2010. Good progress has been made on the reduction of workforce and operating costs.Eurocopter’s order book amounted to € 14.6 billion (year-end 2009: € 15.1 billion) with 1,122 helicopters (year-end 2009: 1,303 helicopters).
Astrium revenues in 2010 increased by four percent to € 5,003 million (FY 2009: € 4,799 million), marking a year of strong programme execution at the Division. This resulted in revenue performance above expectations, more than compensating the one-time catch up effect for in-orbit incentive schemes booked in 2009. 2010 milestones include the start of M51 ballistic missile deliveries for the French Navy. Ten Astrium-built satellites were launched and are performing successfully and Ariane 5 delivered its
41st consecutive launch success bringing the total number to six for 2010. EBIT* improved by 8 percent to € 283 million (FY 2009: € 261 million), reflecting growth and productivity in defence and military services as well as operational improvement in institutional activities.
Astrium also launched a transformation programme, AGILE, to increase efficiency and prepare for a changing competitive environment.
Order intake reached € 6.0 billion in 2010 supported by continued commercial momentum (FY 2009: € 8.3 billion, including the Ariane 5 PB batch of 35 launchers). 2010 orders include the M51 evolution and maintenance contracts and two optical reconnaissance satellites for the French Defence Procurement Agency (DGA). Furthermore, the Skynet5 contract with the British Ministry of Defence was extended. The European Space Agency awarded contracts to begin the first development phase of Ariane 5 ME (Mid-life evolution) and to undertake initial development studies for a Next Generation Launcher (NGL). At the end of December 2010, the order book for Astrium increased to € 15.8 billion (year-end 2009: € 14.7 billion).
Revenues of Cassidian in 2010 increased by 11 percent to € 5,933 million compared to the previous year (FY 2009: € 5,363 million). This strong revenue increase reflects volume growth from core and export in Eurofighter and Missile programmes and progress in Lead Systems Integrator border security contracts. EBIT* stood stable at € 457 million (FY 2009: € 449 million). It reflects margin growth in mature programmes and significant growth in self-funded R&D for next generation products. It was weighed down by net one-time effects of around € 20 million. This includes the cancellation of the FiReControl contract by the UK government. R&D investment is focused mainly on Unmanned Aerial Systems (UAS) and secure communications.
EADS continues to investigate requirements and funding solutions for the Talarion UAS with customers, stressing the need for a timely commitment to the programme by governments. A successful first flight for EuroHawk and continued testing of the Barracuda demonstrator confirm technical capability in this business field.
Cassidian is beginning to feel the first pressure from the home countries defence budget situation with some delayed order intake and higher R&D; however, 2010 demonstrated robust performance. The German government is expected to communicate on its plans in the spring. In the meantime, a transformation plan is under preparation for the new business environment, which will see growth in the security business.
In 2010, Cassidian advanced with its globalisation strategy, joining forces with Odebrecht in Brazil in the field of defence and security technology as well as creating an engineering centre and a joint venture with
Larsen & Toubro in India.
The order intake level of € 4.3 billion (FY 2009: € 8.0 billion) in a more challenging market was below the revenue level. At the end of December 2010, the Division’s order book remained solid at € 16.9 billion (year-end 2009: € 18.8 billion).
Headquarters and Other Businesses (not belonging to any Division)
Revenues of Other Businesses increased by 8 percent to € 1,182 million (FY 2009: € 1,096 million). This increase was driven predominantly by the ramp-up in Light Utility Helicopter (LUH) deliveries at EADS North America. EBIT* of Other Businesses grew to € 25 million (FY 2009: € 21 million) thanks to increases at ATR and Sogerma which was reduced by higher investment at EADS North America. The increase at ATR included a positive one-time effect from foreign exchange of around € 15 million.
ATR delivered 52 aircraft in 2010 (FY 2009: 53 aircraft) and received 78 firm net orders (FY 2009: 26 net orders) as well as 33 options. Order intake was higher than expected with a very active market on the new -600 version. ATR market share amounted to around 65 percent in 2010, confirming its leadership on the segment. New orders include 20 ATR 72-600 from Brazilian carrier Azul Linhas Aéreas and ATR gained a new operator in Trinidad and Tobago Airlines, which placed an order for 9 ATR 72-600. In 2010, ATR delivered its 900th aircraft to Brazilian Airline TRIP Linhas Aéreas. At the end of December 2010, ATR’s order book stood at 159 aircraft (year-end 2009: 133 aircraft) and production rates are expected to increase in 2011 thanks to a notable improvement in its market and financing environment.
Addressing a potential key helicopter campaign in the U.S., EADS North America conducted the first flight of its Armed Aerial Scout 72X Technical Demonstration Aircraft in December. It also delivered the 150th UH-72A Lakota Light Utility Helicopter to the U.S. Army in February 2011 – with every delivery on time and on budget. On 31 December 2010, the order book of Other Businesses stood at € 2.5 billion (year-end 2009: € 2.0 billion).
* 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.
EADS is a global leader in aerospace, defence and related services. In 2010, the Group – comprising Airbus, Astrium, Cassidian and Eurocopter – generated revenues of € 45.8 billion and employed a workforce of nearly 122,000.
EADS – Fourth Quarter Results (Q4) 2010
(Amounts in euro)
For footnotes please refer to page 13.
Note to editors:
Live-Transmission EADS Analysts Conference Call on the Internet
You may listen to the Analysts Conference Call today at 09:30 a.m. CET with EADS CEO Louis Gallois and CFO Hans Peter Ring on the EADS website www.eads.com.
Please click on the banner located on the front page. A recording of the call will be available later on.
EADS – Full Year (FY) Results 2010
(Amounts in euro)
For footnotes please refer to page 13.
For footnotes please refer to page 13.
Q4 2010 revenues increased by 8 percent, driven by A400M milestone recognition and growth in Eurocopter, Astrium and Cassidian.
Q4 2010 EBIT* improved significantly compared to 2009 which was weighed down by the 2009 A400M and A380 provision adjustments. EBIT* before one-off improved thanks to better performance at Airbus Commercial, Astrium, Cassidian and Eurocopter.
Q4 2010 Airbus Commercial EBIT* was negative due to negative foreign exchange one-timers.
Footnotes for pages 10 to 12:
1) Earnings before interest, taxes, depreciation, amortisation and exceptionals.
2) Earnings before interest and taxes, pre goodwill impairment and exceptionals.
3) EADS continues to use the term Net Income. It is identical with Profit for the period attributable to equity owners of the parent as defined by IFRS Rules.
4) Contributions from commercial aircraft activities to EADS Order Intake and Order Book based on list prices.
5) Following integration of Airbus Military into Airbus, Airbus is reporting in two segments: Airbus Commercial and Airbus Military. The Airbus Commercial perimeter includes EFW and the completed aerostructures reorganisation but excludes the A400M. Airbus Military includes the former Military Transport Aircraft Division as well as A400M Airbus operations. Eliminations are treated at the Division level.
6) To be proposed to the EADS Annual General Meeting.
Safe Harbour Statement:
Certain statements contained in this press release are not historical facts but rather are statements of future expectations and other forward-looking statements that are based on management’s beliefs. These statements reflect the EADS’ views and assumptions as of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements.
When used in this press release, words such as “anticipate”, “believe”, “estimate”, “expect”, “may”, “intend”, “plan to” and “project” are intended to identify forward-looking statements.
This forward looking information is based upon a number of assumptions including without limitation: assumption regarding demand, current and future markets for EADS’ products and services, internal performance, customer financing, customer, supplier and subcontractor performance or contracts negotiations, favourable outcomes of certain pending sales campaigns.
Forward looking statements are subject to uncertainty and actual future results and trends may differ materially depending on variety of factors including without limitation: general economic and labour conditions, including in particular economic conditions in Europe, North America and Asia, legal, financial and governmental risk related to international transactions, the cyclical nature of some of EADS’ businesses, volatility of the market for certain products and services, product performance risks, collective bargaining labour disputes, factors that result in significant and prolonged disruption to air travel world wide, the outcome of political and legal processes, including uncertainty regarding government funding of certain programs, consolidation among competitors in the aerospace industry, the cost of developing, and the commercial success of new products, exchange rate and interest rate spread fluctuations between the euro and the U.S. dollar and other currencies, legal proceeding and other economic, political and technological risk and uncertainties. Additional information regarding these factors is contained in the Company’s “registration document” dated 21 April 2010. For more information, please refer to www.eads.com.