EADS (stock exchange symbol: EAD) achieved solid financial results in the first half of 2012, exceeding expectations. Order intake(5) in the first six months reached € 28.2 billion driven by solid order activity at Eurocopter, Astrium, Cassidian and Airbus Military and ongoing commercial momentum at Airbus. At the end of June, EADS’ order book(5) stood at a record level of € 551.7 billion providing stability and visibility in the current macro environment. Revenues amounted to € 24.9 billion. The EBIT* before one-off of around € 1.4 billion benefited from strong underlying performance. The reported EBIT* amounted to € 1.1 billion, significantly above the 2011 level. The Net Cash position amounted to € 9.7 billion.
“The Group performed well in the first six months and our financial results demonstrate steady momentum. The new management is united in pursuing improved profitability through a clear focus on programme execution. Another focus of our efforts is to further integrate and globalise EADS. One important step into this direction is our decision to build a Final Assembly Line for Airbus aircraft in the US”, said Tom Enders, CEO of EADS. “Our key programmes, particularly at Airbus, continue to command our utmost attention. On A350 especially, maturity of sections delivered to the final assembly is of key importance to us as we prepare for a robust production ramp-up.”
In the first six months of 2012, EADS’ revenues increased 14 percent to € 24.9 billion (H1 2011: € 21.9 billion) driven by growth across all Divisions. The newly acquired companies in 2011 contributed by around € 800 million to this growth. Until the end of June, physical deliveries continued to be at a high level with 279 aircraft at Airbus Commercial and 198 helicopters at Eurocopter. In July, Astrium achieved the 49th consecutive successful Ariane 5 launch.
EBIT* before one-off – 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 € 1.4 billion (H1 2011: around € 0.7 billion) for EADS and at around € 830 million for Airbus (H1 2011: around € 310 million). The increase compared to the same period last year is driven by improved performance at Airbus Commercial, Eurocopter and Astrium. Operational improvement at Airbus Commercial includes favourable volume and better pricing. Eurocopter performance reflects volume and mix effects from commercial and support activity while at Astrium the increase is driven by productivity improvements and the integration of Vizada.
During the first half of 2012, EADS accelerated its hedge activity and implemented $ 19.2 billion of new hedge contracts at an average rate of € 1 = $ 1.31, which enhances stability of the Group’s financial performance. At the end of June, EADS’ total hedge portfolio stood at $ 84.1 billion.
EADS’ reported EBIT* increased by 91 percent to € 1,078 million (H1 2011: € 563 million), driven by the improvement of the EBIT* before one-off.
In the first half of 2012, the dollar mismatch and balance sheet revaluation had a positive impact on the EBIT* of around € 20 million.
This quarter, with the A350 XWB Entry-into-Service moving into H2 2014, Airbus Commercial booked a charge of € 124 million to account for the actual delay of around three months.
The A380 wing rib technical fix is under development. For the A380s already delivered, the total charges recorded in the first half of 2012 amounted to € 181 million, of which € 23 million were booked in the second quarter.
Net Income rose significantly to € 594 million (H1 2011: € 109 million), or earnings per share of € 0.73 (earnings per share H1 2011: € 0.13). The Net Income* before one-off(4) increased to € 814 million (H1 2011: € 389 million) in line with the strong underlying performance.
The finance result amounts to € -239 million (H1 2011: € -366 million). The interest result of € -143 million (H1 2011: € -97 million) deteriorated compared to the 2011 level, mainly due to lower interest income related to the lower average cash balance and interest rates compared to last year.
Meanwhile, the other financial result of € -96 million (H1 2011: € -269 million) includes an improved impact from a foreign exchange revaluation compared to H1 2011. This line also includes the unwinding of discounted provisions Self-financed Research & Development (R&D) expenses remained roughly stable at € 1,425 million (H1 2011: € 1,409 million).
Free Cash Flow before customer financing amounted to € -1,671 million (H1 2011: € -286 million). The improvement of the operational performance is weighed down by a deterioration of the working capital. This is mainly due to a strong increase of inventory as EADS continues to ramp up production while deliveries and milestone achievements are back-loaded in the year, especially on A380. However, the main deterioration at Airbus was related to the first quarter of 2012.
In the first half of 2012, low customer financing support of € -80 million had been provided.
The level of capital expenditure increased compared to last year, mainly at Airbus and Eurocopter.
Free Cash Flow after customer financing stood at € -1,751 million (H1 2011: € -184 million).
The Net Cash position of EADS amounted to € 9.7 billion (year-end 2011: € 11.7 billion), also reflecting a cash contribution to pension assets of € 320 million as well as the dividend payment of around € 370 million.
EADS’ order intake(5) amounted to € 28.2 billion (H1 2011: € 58.1 billion). The order intake was driven by solid order activity at Eurocopter, Astrium, Cassidian and Airbus Military and ongoing commercial momentum at Airbus Commercial.
At the end of June 2012, the Group’s order book(5) stood at a record level of € 551.7 billion (year-end 2011: € 541.0 billion), providing stability and visibility in the current macro environment.
The Airbus Commercial backlog was improved by a positive revaluation impact of around € 12 billion due to the appreciation of the US dollar closing spot rate since the year-end 2011.
The defence order book stood stable at € 51.9 billion (year-end 2011: € 52.8 billion).
At the end of June 2012, EADS’ workforce consisted of 135,634 employees, (year-end 2011: 133,115).
As the basis for EADS 2012 guidance the Group expects the world economy and air traffic to grow in line with prevailing independent forecasts and assumes no major disruption due to the current euro crisis.
EADS’ results of the first six months confirm the Group’s growth and improvement trend. These positive dynamics lead EADS to improve its 2012 guidance. In 2012, Airbus should deliver around 580 commercial aircraft, including 30 targeted A380 deliveries.
Gross orders should be above the number of deliveries, in the range of 600 to 650 aircraft.
Based on an assumption of € 1 = $ 1.35, EADS 2012 revenues should continue to grow at around 10 percent.
Based on the solid H1 performance, especially at Airbus, Eurocopter and Astrium, EADS expects 2012 Group EBIT* before one-off to be around €2.7bn.
As a result and with an expected tax rate for the full year of slightly below 30 percent, the EADS 2012 EPS* before one-off(4) should now be around € 1.95 (FY 2011: € 1.39).
Going forward, the reported EBIT* and EPS* performance of EADS will be dependent on the Group’s ability to execute on its complex programmes such as A400M, A380 and A350 XWB, in line with the commitments made to customers.
Based on the targeted 30 A380 deliveries, EADS should continue to generate a positive Free Cash Flow after customer financing and before acquisitions.
* 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 – Half-Year (H1) Results 2012
(Amounts in euro)
EADS – Second Quarter Results (Q2) 2012
EADS is a global leader in aerospace, defence and related services. In 2011, the Group – comprising Airbus, Astrium, Cassidian and Eurocopter – generated revenues of € 49.1 billion and employed a workforce of over 133,000.