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08 March 2011
08. March 2011 Company

Ad-hoc-Release: From Stabilisation to Expansion: EADS Reports 2010 Full Year Results


• 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 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.

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