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12 May 2011
12. May 2011 Company

Ad-hoc release - Solid Start to the Year: EADS Reports Results of First Quarter 2011

• Successful market introduction of A320neo
• Revenues up 10 percent to € 9.9 billion
• EBIT* before one-off: around € 230 million
• Free Cash Flow of € 0.3 billion
• Net Income: € -12 million, impacted by negative dollar accounting revaluation
• Record Net Cash position of € 12.2 billion

EADS (stock exchange symbol: EAD) releases encouraging results for the first quarter 2011 while the recovery of the global economy continues to support the growth of passenger traffic. Based on this positive momentum, Airbus is analysing a further increase in its single aisle production rate which is currently scheduled to increase to 40 aircraft per month by Q1 2012. A decision is expected shortly. In the first three months of 2011, the order intake(4) amounted to € 6.3 billion. EADS’ order book of more than € 422 billion provides a solid platform for future deliveries. First quarter earnings reflect the usual seasonality pattern in our institutional businesses. Revenues amounted to € 9.9 billion. The EBIT* before one-off of around € 230 million benefited from good underlying performance on legacy programmes and favourable phasing of costs at Airbus Commercial. The reported EBIT* amounted to € 192 million. At € 12.2 billion, thanks to strong cash-flow management in the first quarter, the Net Cash position remains a key asset to foster future growth. The impacts from events in Japan and North Africa on the commercial aircraft market are expected to be of a temporary nature. These developments are being actively managed, while budget pressures in institutional markets, helicopters and defence and the currency volatility are being monitored.

”Our first quarter financial results reflect a good start to 2011. The early market success of the A320neo validates the significant prospects we envisage for this programme and the acquisition of Vector Aerospace in Canada is a major step forward in expanding our services offering. We also signed the A400M contract amendment, which provides a solid base to further advance this key programme”, said Louis Gallois, CEO of EADS. “While advancing with the A350 XWB through achieving several critical milestones, this decisive programme continues to require our closest attention.”

In the first quarter, EADS’ revenues increased 10 percent to € 9.9 billion (Q1 2010: € 9.0 billion). This growth is driven primarily by mix effects at Airbus Commercial and Astrium. Deliveries remained at a high level with
119 aircraft at Airbus Commercial, 81 helicopters at Eurocopter and the 42nd consecutive successful Ariane 5 launch. In the first quarter, Airbus Military recorded revenues for the A400M programme of € 165 million, based on milestones. Series production has started and civil certification is planned for 2011. On 7 April 2011, the Customer Nations and EADS concluded the A400M contract amendment negotiations. The contract amendment implements the changes which were agreed in principle by the Customer Nations and EADS on
5 March 2010.

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 around € 230 million (Q1 2010: around € 150 million) for EADS and at around € 160 million for Airbus (Q1 2010: around € 80 million). It benefited from good underlying performance in Airbus legacy programmes as well as in core business activities in the other Divisions. It also included favourable phasing effects, particularly of non series costs at Airbus Commercial, which should reverse throughout the year and an unchanged A380 impact compared to last year.

EADS’ reported EBIT* stood at € 192 million (Q1 2010: € 83 million).

Net Income (loss)
amounted to € -12 million (Q1 2010: € 103 million), or earnings per share of € -0.01 (earnings per share Q1 2010: € 0.13). The finance result amounts to € -197 million (Q1 2010: € 77 million). The interest result of € -47 million is roughly stable with the 2010 level (Q1 2010: € -53 million). Meanwhile, the other financial result deteriorated considerably by € 280 million year-on-year. It amounted to € -150 million (Q1 2010: € 130 million). The main change comes from the negative accounting revaluation of US dollar and British pound (GBP) cash assets due to the deterioration of the closing spot rate at the end of March compared to the end of December 2010. The change in time value of EADS’ hedging options has also led to a negative valuation. On the other hand, the net change in fair value of cash-flow hedges had a positive impact of € 1.8 billion on EADS equity.

Self-financed Research & Development (R&D)
expenses increased to € 650 million (Q1 2010: € 572 million), driven mainly by development on the A350 XWB at Airbus.

Free Cash Flow
before customer financing improved to € 208 million (Q1 2010: € -972 million), thanks to better operational performance. The improvement in working capital of € 1.2 billion is driven by higher advance payments received, partially reduced by a ramp-up in inventories, particularly at Airbus. The level of capital expenditures increased slightly compared to last year, as expected, as investment continues to ramp-up on the A350 XWB programme. Customer financing generated cash of around € 100 million in the first quarter as the lessor and banking market appetite continues to gain momentum. Free Cash Flow after customer financing amounted to € 309 million (Q1 2010: € -1,124 million).

EADS’ Net Cash position amounted to € 12.2 billion (year-end 2010: € 11.9 billion), remaining a solid foundation for the Group’s operational needs as well as future growth.

The Group’s order intake(4) of € 6.3 billion was lower than one year ago (Q1 2010: € 14.4 billion) which included a high level of commercial aircraft orders for the A330 and A350 XWB at Airbus. The First Quarter 2011 order intake is net of 68 commercial aircraft cancellations and conversions. By the end of March 2011, EADS’ order book(4) stood at € 422.4 billion (year-end 2010: € 448.5 billion), providing good visibility for the future. The Airbus Commercial backlog has been reduced by a negative revaluation impact of around € 22 billion due to the deterioration of the US dollar closing spot rate since the year-end 2010. The defence order book is almost stable at € 57.0 billion (year-end 2010: € 58.3 billion).

At the end of March 2011, EADS’ workforce consisted of 122,899 employees (year-end 2010: 121,691).


EADS confirms its 2011 guidance based on an assumption of € 1 = $ 1.35 for the year-end closing spot rate. 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, reported EBIT* and Earnings Per Share (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.

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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