Airbus SE — Earnings Release 2006

Mar 9, 2007

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Ad-hoc | 9 March 2007 07:01

EADS – FY 2006 results

European Aeronautic Defence and Space Company / Final Results

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Ad-hoc release, 9 March 2007

EADS – FY 2006 results

EADS 2006 results dominated by Airbus loss

· Revenue growth to € 39.4 billion driven by record deliveries and
30 percent increase in defence revenues

· EBIT* of € 399 million burdened by Airbus loss

· Free Cash Flow resilient at € 2.0 billion, Net Cash Position
at € 4.2 billion

· 2007 budget forecasts stable EBIT*, negative Free Cash Flow

Based on a strong commercial momentum EADS (stock exchange symbol: EAD)
displayed revenue growth within all its Divisions. High delivery levels led
to revenues of € 39.4 billion – an increase of 15 percent (FY 2005:
€ 34.2 billion). For the first time the Group hit the landmark of € 10
billion in defence revenues. In 2006, EADS posted an EBIT* (pre goodwill
and exceptionals) of € 399 million (FY 2005: € 2.9 billion). The impact of
the A380, A350 and A400M combined with the deteriorating weakness of the US
Dollar against the Euro pushed Airbus into a loss. It is overcompensated by
strong EBIT* of the other EADS businesses.

Airbus difficulties overshadowed a remarkable order intake of 790 aircraft,
record deliveries of 434 aircraft, the launch of the A350XWB programme and
the successful A380 type certification. Eurocopter experienced an
outstanding year in a very supportive market environment with an
unprecedented level of 615 new orders for helicopters. It recorded a
strategic breakthrough with the US Army light utility helicopter UH-72A
Lakota order. With a total of 381 helicopters Eurocopter delivered more
than ever before. EADS Astrium significantly improved profitability and was
awarded important orders for satellites and systems such as SatComBW, a
major satellite communication programme in Germany. The Defence & Security
Division enhanced its performance and captured business opportunities in
areas such as the secure networks business, thus creating a solid base for
further long-term improvement.

The strong increase in revenues to € 39.4 billion was supported by all
Divisions, in particular by the higher deliveries at Airbus and Eurocopter.
The contribution from the EADS Astrium Division came mainly from the
ramp-up of Ariane 5 production, Paradigm and ballistic missile development.
At EADS Defence & Security, revenues grew due to Eurofighter, the missile
business and to contributions from the Professional Mobile Radio business.
Passing all A400M milestones (including the one shifted from 2005) led to
higher revenues in the Military Transport Aircraft Division.

EADS’ total EBIT* in 2006 was € 399 million (FY 2005: € 2,852 million).
EBIT* was substantially burdened by the impact of A380 delays,
A350 related charges, high Research & Development (R&D) expenses and by
losses at EADS Sogerma. Additionally, hedges for EADS Group matured at a
less favourable average rate of € 1 = US$ 1.12 (FY 2005:
€ 1 = US$ 1.06). These negative factors were partly compensated by
significantly improved contributions from Airbus’ series production and the
Group’s helicopter, defence and space businesses, and a minor contribution
from a pension accounting change. The Group’s reduced Net Income of € 99
million (FY 2005: € 1,676 million), or € 0.12 per share (FY 2005: € 2.11)
mainly mirrors the Group’s EBIT* development.

Focused on the future, EADS invested over six percent of its revenues in
R&D. In 2006, the Group’s self-financed R&D expenses increased to
€ 2,458 million (FY 2005: € 2,075 million), caused mostly by Airbus
continuing aircraft development programmes and higher Research & Technology
(R&T) effort across the Group.

Free Cash Flow including customer financing stayed high at € 2,029 million
(FY 2005: € 2,413 million), as an unfavourable working capital development
was offset by the increased sell-down of customer financing assets. Free
Cash Flow before customer financing amounted to € 869 million (FY 2005: €
2,239 million).

The Net Cash Position of € 4.2 billion (year-end 2005: € 5.5 billion) was
impacted by the acquisition of BAE Systems’ 20 percent stake in Airbus
(€ 2.75 billion) and dividend payments. Adjusted for the one-off payment
for the Airbus stake it has again improved, highlighting the strength of
the underlying recurring business.

EADS’ order intake amounted to € 69.0 billion (FY 2005: € 92.6 billion).
In terms of new orders, Eurocopter set a new record in 2006 (up 39 percent
compared to the previous record in 2005), Airbus had its second-best year
ever and EADS Astrium another outstanding year.

At the end of December, EADS’ order book stood at € 262.8 billion
(year-end 2005: € 253.2 billion). Contributions from commercial aircraft
activities are based on list prices. The order book increase versus
year-end 2005 was achieved despite a € 17 billion impact due to revaluation
at a less favourable €/US$ exchange rate. The Group’s defence order book
further increased and stood at € 52.9 billion as of 31 December 2006
(year-end 2005: € 52.4 billion).

The next meeting of the EADS Board of Directors will make a dividend
proposal to the EADS Annual General Meeting.

Outlook

Under its 2007 internal budget, EADS plans its revenues will experience a
single-digit decrease (mainly due to the assumed €/US$ rate of 1.30), and
its EBIT* will remain roughly stable in 2007.

Adjusted for a stable US Dollar, Airbus revenues would remain level, based
on 440 to 450 deliveries through the year, and despite lower contributions
from the A400M. Airbus will display another substantial loss in 2007,
attributable to charges for the Power8 restructuring, further costs to
support the A380 programme, potential A350XWB launch charges, higher R&D
expenses, as well as the impact of the worsening US Dollar parity to the
Euro.

Meanwhile, helicopters, defence and space businesses should display stable
revenues, and should collectively increase their contribution to a combined
EBIT* expected to be close to € 1 billion as soon as 2007.

The Free Cash Flow contribution from Airbus in 2007 will lead to a negative
Group-wide Free Cash Flow as low as € -1 billion. However, volatility of
working capital components can provoke substantial swings in this figure.

Over the medium term, the following factors will drive EADS’ outlook:

Deliveries of aircraft are currently expected to continue to grow, albeit
at a much reduced rate. Airbus revenues will most likely be affected by a
deterioration of mix and of pricing for recent orders, partly due to
competitive pressure.

Research and Development expenses are planned to grow gradually, driven by
the A350XWB development and increased R&T spending.

In the context of management change at Airbus, and the cost volatility
resulting from the recent industrial problems on programmes, the management
is working to establish a satisfactory long-term Airbus plan, and it is
currently concentrating on the rebaselining of its cost base, to target
mid-single-digit EBIT* margins.

All other businesses are expected to collectively grow their revenues and
EBIT* contribution over the coming years.

EADS management is committed to restoring Group wide EBIT* margins,
although at levels lower than the margin achieved in 2005.

* 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.

Contact:
Michael Hauger EADS +49 89 60 73 42 35

DGAP 09.03.2007

Language: English
Issuer: European Aeronautic Defence and Space Company
Beechavenue 130-132
1119 PR Schiphol Rijk Niederlande
Phone: 00 800 00 02 2002
Fax: +49 (0)89 607 - 26481
E-mail: ir@eads.net
www: www.eads.com
ISIN: NL0000235190
WKN: 938914
Indices: MDAX
Listed: Amtlicher Markt in Frankfurt (Prime Standard); Freiverkehr in
Berlin-Bremen, Hannover, Düsseldorf, Hamburg, München,
Stuttgart

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