Airbus SE — Earnings Release 2007

Mar 11, 2008

News Details

Ad-hoc | 11 March 2008 07:00

EADS – FY 2007 results

European Aeronautic Defence and Space Company / Final Results

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EADS – FY 2007 results

Strong business performance while facing significant challenges

· Order intake doubled to Euro 136.8 billion
· 2007 EBIT* of Euro 52 million
· Strong Free Cash Flow before customer financing (Euro 3.4 billion)
reflects robust contributions from operations – Net Cash Position
surged to Euro 7.0 billion
· Revenues stable despite unfavourable US dollar
· EADS expects recovery in 2008 with EBIT* guidance of
Euro 1.8 billion

EADS (stock exchange symbol: EAD) delivered a strong business performance
in 2007 while experiencing significant challenges. The Group's order
intake, at record heights, doubled compared to the previous year and the
EBIT* reached break-even, as was indicated in EADS' revised guidance. For
2008, the Group targets an EBIT* of Euro 1.8 billion.

'2007 was a tough year with many high profile challenges to be overcome.
The whole of EADS has shown strength and dedication in tackling these
challenges and while there is still a lot of work to be done in order to
regain the full trust of our investors and customers we have made a lot of
progress. We have implemented a simplified governance structure and
maintained high levels of investment in research and technology. The focus
on efficiency and changes from Power8 are a precondition for continued
investment in EADS' future,' said EADS CEO Louis Gallois. 'EADS refuels for
future success and is taking definite steps to deliver against the
ambitious goals of Vision 2020. We have fixed a lot of issues, and our cash
situation allows us flexibility in the face of global economic challenges.
We are cautious by nature, but I feel EADS is establishing a firm footing
on higher ground.'

While the Power8 restructuring programme registered initial savings, Airbus
mastered a further ramp-up in aircraft deliveries, especially for the A320
Family. Two A380s are currently in service with Singapore Airlines.
Eurocopter continued its increase in serial helicopter production and
service business. EADS Astrium raised Ariane 5 production rate, benefited
from growth in Paradigm services and achieved a technological success
seeing the Columbus space laboratory integrated in the International Space
Station ISS. Operational improvements in the Defence & Security Division
came from both Military Air Systems and Defence and Communication Systems.

Revenues stood at Euro 39.1 billion (FY 2006: Euro 39.4 billion), supported
by higher commercial aircraft deliveries at Airbus (453 units versus 434
compared to the previous year), as well as increased volumes at Eurocopter
and EADS Astrium. Despite an unfavourable US Dollar impact and a decrease
in A400M revenue recognition Group revenues remained roughly stable in
comparison with the previous year. EADS achieved
55 percent of its revenues outside Europe due to strong contributions from
Asia-Pacific (23 percent), North America (20 percent) and other regions (12
percent).

EADS’ EBIT* (pre goodwill and exceptionals) for 2007 stood at
Euro 52 million compared to Euro 399 million in 2006. The EBIT* was
strongly burdened by a Group-wide A400M charge (reflecting programme delays
of 6 to 12 months) and by Power8 restructuring and A350 XWB charges. EBIT*
suffered from a negative impact of the weak US Dollar. Maturing of less
attractive hedges than in 2006 was more than balanced out by revaluations
on liabilities. However, the US Dollar impact on provisions put additional
pressure on the Group's EBIT*. Nevertheless, the underlying business
performance of EADS’ legacy programmes continued to improve. Positive
contributions came from the ramp-up in Airbus deliveries and the strong
helicopter, defence and space businesses.
EADS recorded a Net Loss of Euro 446 million (Net Income FY 2006:
Euro 99 million), or a loss per share of Euro 0.56 (earnings per share FY
2006: Euro 0.12). In the year under review, self-financed R&D expenses
increased to Euro 2,608 million (FY 2006: Euro 2,458 million). This
reflects Airbus’ continuing aircraft development programmes, especially for
the A350 XWB.

Free Cash Flow before customer financing increased to Euro 3,426 million
(FY 2006: Euro 869 million) due to an improved cash flow from operations
and – thanks to stricter criteria on investment decisions – a reduced
capital expenditure. The improvement in operating cash flow was mainly
related to a stronger inflow of customer advance payments (incl. a Paradigm
refinancing step-up of Euro 1.1 billion) and only partly offset by the
build-up of inventories. Free Cash Flow including customer financing
improved to Euro 3,487 million (FY 2006: Euro 2,029 million) as the above
described positive impacts were largely offset by a lower net contribution
from sell-down of customer financing assets. In the course of 2007, the Net
Cash Position grew to Euro 7.0 billion (year-end 2006: Euro 4.2 billion).

The Group's sales successes, its financial strengths and its encouraging
operational performance in legacy programmes, is reflected in the dividend.
The Board of Directors is proposing to the Annual General Meeting of
shareholders a dividend of Euro 0.12 per share (dividend per share 2006:
Euro 0.12).

'Paying a dividend – even if it is limited and despite a net loss – is more
than a gesture of appreciation for the shareholders' loyalty: it's clearly
an expression of confidence in the outlook for the years ahead, despite the
challenges we will have to overcome,' EADS CFO Hans Peter Ring commented.

EADS doubled its order intake in 2007 despite the weaker US Dollar and
achieved a record of Euro 136.8 billion (FY 2006: Euro 69.0 billion). The
main drivers were the vast upswing at Airbus (up 120 percent) and the
remarkable growth at Defence & Security (up 45 percent) and Eurocopter
(up 35 percent). In a favourable market environment the Group benefited
from both robust demand and an attractive product offering across its
entire portfolio.

By year-end 2007, EADS’ order book reached an all-time high of
Euro 339.5 billion (year-end 2006: Euro 262.8 billion). It achieved this
29 percent growth despite performing a Euro -19.9 billion revaluation due
to the weaker US Dollar at year-end. Orders within the commercial aircraft
business are based on list prices. The Group further expanded its defence
order book through new contracts for Eurocopter, EADS Astrium and Defence &
Security; it closed the year at Euro 54.5 billion (year-end 2006: Euro 52.9
billion). At the end of December, EADS had 116,493 employees (year-end
2006: 116,805).

Outlook
The EADS guidance and outlook are based on an exchange rate of
Euro 1 = US$ 1.45.

Based on continued economic growth and comforted by a solid order book,
despite the volatility of markets, the Group believes in the continuation
of a resilient commercial aircraft market and Airbus deliveries peaking in
2011-2012.

EADS expects Airbus to capture about 700 aircraft orders in 2008.
EADS revenues are expected to exceed Euro 40 billion in 2008, with about
470 aircraft deliveries for the full year.

EADS expects its 2008 EBIT* at Euro 1.8 billion, reflecting higher comfort
in its improving ability to drive profitability, yet recognising evolving
economic and cost challenges. This figure contains allowances for planning
contingencies. However, it does not take into account the possible
influence of short-term currency movements on revaluations of existing
provisions, nor does it take into account an impact from the potential sale
of industrial sites.

While they are not without risk, EADS does not presently expect a further
material deterioration of its critical development programmes.
Before the impact of customer financing, EADS presently expects 2008
Free Cash Flow at Euro 0.5 billion (keeping in mind it is the most volatile
item to predict).

* 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:
Pierre Bayle +33 1 42 24 20 63
Markus Wölfle +49 89 60734287
11.03.2008 Financial News transmitted by DGAP

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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
Internet: www.eads.com
ISIN: NL0000235190
WKN: 938914
Indices: MDAX
Listed: Regulierter Markt in Frankfurt (Prime Standard); Freiverkehr
in Berlin, Hannover, Düsseldorf, Hamburg, München, Stuttgart

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