Airbus SE — Earnings Release 2010

Nov 12, 2010

News Details

Ad-hoc | 12 November 2010 06:59

European Aeronautic Defence and Space Company EADS N.V.: EADS Reports Nine-Month Results for 2010

European Aeronautic Defence and Space Company EADS N.V. / Key word(s): Quarter Results

12.11.2010 06:59

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Ad-hoc-Release, 12 November 2010

EADS Reports Nine-Month Results for 2010

• Significant order intake of EUR 57.7 billion driven by Airbus

• Long Range production rate increases to 9 aircraft per month in Q1 2012

• Revenues of EUR 31.6 billion

• EBIT* before one-off at EUR 0.8 billion

• Net income: EUR 198 million

• Net Cash at EUR 10.3 billion: better than expected, a key asset

• Increase of Free Cash Flow guidance

EADS' (stock exchange symbol: EAD) macro-economic and commercial
environment continues to improve thanks to increasing aircraft demand.
Institutional markets including helicopters, defence and public budgets
have to be monitored. At the end of September, the order intake(4) of EUR
57.7 billion mirrors the improved momentum in commercial aviation. EADS'
order book of more than EUR 426 billion provides a solid platform for
future deliveries. EADS' revenues amount to EUR 31.6 billion. The EBIT*
before one-off of EUR 0.8 billion benefited from the underlying performance
in Airbus legacy programmes and other core business activities. EBIT*
amounted to EUR 784 million. The Net Cash position of
EUR 10.3 billion is better than expected thanks to better cash performance
and favourable phasing. It is a key asset to foster future growth.

'The commercial aviation sector continues its ascent which starts to be
reflected in the nine-month results. Within this improving environment, the
A380 production is visibly progressing and manufacturing of the A350 has
begun.
I want to express our gratitude to the A400M Customer Nations who have
supported us in reaching an agreement', said Louis Gallois, CEO of EADS.
'At the same time, budget reviews in our home countries are not yet fully
completed; we therefore remain attentive to challenges which could arise
for our business with government customers. Looking forward, beyond 2011
the upturn in the commercial aircraft business should drive the
profitability improvement of the Group. In the mid-term, at the current
exchange rates, Airbus should significantly improve its underlying
profitability thanks to better volume, pricing and further economic
improvement of the A380 performance.'

In the first nine months, EADS' revenues increased to EUR 31.6 billion
(9m 2009: EUR 29.7 billion) thanks to growth from both volume and mix
effects across core businesses. Physical deliveries remained at a high
level with
380 aircraft at Airbus Commercial, 367 helicopters at Eurocopter and the
38th consecutive successful Ariane 5 launch. The percentage-of-completion
methodology was resumed on the A400M programme. Until the end of September,
based on the allocation of internal milestones, around
EUR 500 million in revenues were booked on the programme. The Customer
Nations and EADS have concluded negotiations on the overall A400M
discussions. The FY 2009 A400M provision calculation remains valid.
Government payments are more back-loaded than expected after the signature
of the principle agreement in March 2010. Negotiations on the export levy
facility (ELF) scheme are expected to be finalised before the end of the
year. Once parliamentary approvals are obtained, the agreement will be
binding. In the meantime, the A400M flight test programme is progressing
better than expected with the fourth aircraft due to join the flight test
campaign before year-end.

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
EUR 0.8 billion (9m 2009: EUR 1.7 billion) for EADS and around EUR 0.3
billion for Airbus. It benefited from good underlying performance of Airbus
legacy programmes and core business activities in the other Divisions. As
expected, A380 continues to weigh significantly on the underlying
performance. Compared to the first nine months of 2009, EBIT* before
one-off was mainly weighed down by the deterioration of hedge rates and
higher investment in Research & Development.

EADS' reported EBIT* stood at EUR 784 million (9m 2009: EUR 1,089 million).

Net Income amounted to EUR 198 million (9m 2009: EUR 291 million), or
earnings per share of EUR 0.24 (earnings per share 9m 2009: EUR 0.36). The
finance result amounts to EUR -452 million (9m 2009: EUR -615 million). The
interest result of
EUR -176 million (9m 2009: EUR -89 million) reflects the decline in
interest rates on the financial markets. The other financial result amounts
to EUR -276 million
(9m 2009: EUR -526 million). The improvement year-on-year is due to a
positive revaluation of the Group's U.S. dollar and GBP cash assets and the
revaluation of financial instruments.

Self-financed Research & Development (R&D) expenses reached
EUR 2,038 million (9m 2009: EUR 1,834 million), driven by increases at
Airbus due to a ramp-up in A350 XWB activity as well as increasing product
investment at Cassidian for the Unmanned Aerial Systems (UAS) and Systems
businesses and at Eurocopter across the product range. Going forward R&D
expenses should increase at Airbus, Eurocopter and Cassidian.

Free Cash Flow before customer financing of EUR 882 million (9m 2009:
EUR -892 million) has benefited from good commercial order intake, a high
volume of commercial deliveries including 14 A380 as well as favourable
phasing. Receipts from governments for development programmes roughly
compensate payment delays. At Airbus, inventories remained stable in the
first nine months of 2010. The nine-month results of 2009 included a
ramp-up on the A380 but a low level of A380 deliveries as well as a
mismatch between production and delivery rates for both single aisle and
long range aircraft. The inflow of advances linked to Airbus commercial
activity was higher than one year ago, reflecting the increase in
deliveries and commercial aircraft orders. This positive effect was more
than offset by the lower inflows from Astrium and Cassidian. In the first
nine months, the net customer financing outflow was lower than expected at
around EUR -90 million due to a combination of appetite from lessors and
banking market recovery. The third quarter included the sell down of three
A320 operating leases. Free Cash Flow after customer financing amounted to
EUR 791 million (9m 2009: EUR -1,182 million).

EADS' Net Cash position amounted to EUR 10.3 billion (year-end 2009:
EUR 9.8 billion) after a EUR 300 million contribution to pension fund
assets.
It continues to provide a solid foundation for the Group's operational
needs as well as future growth.

The order intake of EADS significantly increased to EUR 57.7 billion
compared to one year ago (9m 2009: EUR 24.6 billion) mainly due to higher
commercial aircraft orders. By the end of September 2010, EADS' order book
stood at a robust
EUR 426.4 billion (year-end 2009: EUR 389.1 billion), mainly reflecting
increases at Airbus and Astrium. The Airbus Commercial order book benefited
from a positive revaluation impact of around EUR 18 billion due to the
closing spot rate of the U.S. dollar that has significantly strengthened
since year-end. The defence order book stood at EUR 56.4 billion (year-end
2009: EUR 57.3 billion).

At the end of September 2010, EADS' workforce consisted of 120,580
employees (year-end 2009: 119,506).

Outlook

In 2010, Airbus gross orders should be up to 500 thanks to the commercial
aircraft upturn and Airbus deliveries should be slightly more than 500.

EADS' guidance is based on an assumption of EUR1 = $1.35 for the Q4 2010
average rate and year-end closing spot rate.

EADS revenues should be more than EUR 44 billion.

At slightly more than 500 deliveries, EADS confirms its EBIT* before
one-off guidance at around EUR 1.2 billion.

Going forward the EBIT* performance of EADS will be dependent on the
Group's ability to execute on the A400M, A380 and A350XWB programmes, in
line with the commitments made to its customers.

Using the above exchange rate assumptions, EADS increases its EBIT*
guidance to at least EUR 1.1 billion.

EADS is also increasing its Free Cash Flow guidance. Provided a sustainable
year-end cash inflow of institutional and government business, the Free
Cash Flow before customer financing should be around EUR 1 billion and Free
Cash Flow after customer financing should be above EUR 800 million compared
to the previously expected free cash outflow of around EUR -600 million.

* 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
2009, the Group - comprising Airbus, Astrium, Cassidian and Eurocopter -
generated revenues of EUR 42.8 billion and employed a workforce of more
than 119,000.

Contacts:

Alexander Reinhardt +49 89 607 34066

Martin Agüera +49 89 607 34735

Charles-Etienne Lebatard +33 1 42 24 24 25

Philipp Lehmann +49 89 607 34287

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Language: English
Company: European Aeronautic Defence and Space Company EADS N.V.
P.O. Box 32008
2303 DA Leiden
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 Hamburg, München, Berlin, Düsseldorf, Hannover, Stuttgart

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