Airbus SE — Earnings Release 2010

Mar 9, 2011

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Ad-hoc | 9 March 2011 06:59

European Aeronautic Defence and Space Company EADS N.V.: From Stabilisation to Expansion: EADS Reports 2010 Full Year Results

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

09.03.2011 06:59

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Ad-hoc-Release, 9 March 2011

From Stabilisation to Expansion: EADS Reports 2010 Full Year Results
- All key indicators above guidance

• Order intake increased 81 percent to EUR 83.1 billion, driven by Airbus
  Commercial

• Revenues up 7 percent (EUR 45.8 billion) with record deliveries of 510
  commercial aircraft

• EBIT* before one-off: EUR 1.3 billion

• Free Cash Flow of EUR 2.7 billion, much stronger than expected

• Return to dividend, proposal of EUR 0.22 per share

• Net income: EUR 553 million (EPS EUR 0.68 per share)

• Record net cash position of EUR 11.9 billion

EADS' (stock exchange symbol: EAD) annual results of the Group's 10th
anniversary year 2010 demonstrate significant achievements supported by the
recovery of the macro-economic and commercial environment which was
stronger than expected. Institutional markets including helicopters,
defence and public budgets still have to be monitored as well as potential
risks linked to oil and commodity prices, air traffic in North Africa and
continued currency issues. In 2010, the order intake(4) amounted to EUR
83.1 billion, driven by improved momentum in commercial aviation. EADS'
order book of more than EUR 448 billion provides a solid platform for
future deliveries. Revenues reached a new high at
EUR 45.8 billion. Likewise, profitability and cash performance were better
than expected. The EBIT* before one-off of EUR 1.3 billion benefited from
the better underlying performance than expected in Airbus legacy programmes
and other core business activities. The reported EBIT* amounted to EUR 1.2
billion. The Net Cash position of EUR 11.9 billion is higher than
anticipated, thanks to better cash management and higher order intake. It
is a key asset to foster future growth.

'2010 was a year of significant progress for EADS. Commercial aircraft
orders exceeded expectations and our cash flow generation was excellent. We
took huge steps forward in managing and controlling key programmes: A400M
has been substantially de-risked and A380 production is improving
steadily', said Louis Gallois, CEO of EADS. 'At the same time, we are
paying the closest attention to the A350 programme, to the evolution of
defence and space budgets and to the recovery of the helicopter market.
After take-off into our second decade of operations, a key priority for us
now is to further improve profitability in future years to lay a solid
foundation for sustainable growth.'

In 2010, EADS' revenues increased 7 percent to EUR 45.8 billion (FY 2009:
EUR 42.8 billion) thanks to growth from both volume and mix effects across
core businesses, reduced by a negative foreign exchange impact of around
EUR 500 million. Physical deliveries remained at a high level with 510
aircraft at Airbus Commercial, 527 helicopters at Eurocopter and the 41st
consecutive successful Ariane 5 launch. The percentage-of-completion
methodology was resumed on the A400M programme based on the allocation of
internal milestones. This has resulted in revenues of around EUR 1 billion
being booked on the programme with zero margin due to the associated
provision utilisation. The Customer Nations and EADS have concluded
negotiations on the overall A400M discussions. Following the approval in
France and Germany, negotiations on the export levy facility (ELF) scheme
are to be finalised with some Customer Nations and are targeted for
completion in 2011. In the meantime, the programme is delivering results
with four development aircraft flying. The A400M maturity gate milestone
was passed in February 2011, which clears the way for the start of series
production. Civil certification is planned for 2011.

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 1.3 billion
(FY 2009: EUR 2.2 billion) for EADS and at around EUR 280 million for
Airbus. It benefited from good underlying performance in all core business
activities in the Divisions, especially the Airbus legacy programmes.
Compared to 2009, EBIT* before one-off was weighed down by the
deterioration of hedge rates (FY2009:
~ EUR 1 = $ 1.26 versus FY2010: ~ EUR 1 = $ 1.35). As expected, A380
continues to weigh significantly on the EBIT* before one-off.

EADS' reported EBIT* stood at EUR 1,231 million (FY 2009: EUR -322
million).
In 2010, EADS has further refined its natural hedging strategy, impacting
reported EBIT* and other financial result but with no impact on EBIT*
before one-off and Net Income.

Net Income amounted to EUR 553 million (FY 2009: EUR -763 million), or
earnings per share of EUR 0.68 (earnings per share FY 2009: EUR -0.94). The
finance result amounts to EUR -371 million (FY 2009: EUR -592 million). The
interest result of
EUR -99 million (FY 2009: EUR -147 million) mainly reflects lower interest
expenses. Meanwhile, the other financial result improved considerably by
around
EUR 170 million year-on-year to EUR -272 million (FY 2009: EUR -445
million) driven mainly by lower unwinding of discounted provisions in 2010
than in 2009. The unwinding of discount mainly decreases due to lower
outstanding provisions.

Based on an Earnings per Share (EPS) of EUR 0.68, the EADS Board of
Directors proposes payment on 6 June 2011 of a dividend of EUR 0.22 cents
per share to the Annual General Meeting of shareholders (exceptionally, due
to the significant loss incurred in 2009, no dividend payment was made that
year). The record date should be 3 June 2011.

'We are pleased to resume paying a dividend to our loyal shareholders.
The Group's performance in 2010 merits the proposed dividend. It is our
clear ambition to gradually improve profitability in the mid-term.
Profitability improvement is the key indicator for a better dividend
distribution in the future,' said Hans Peter Ring, CFO of EADS.

Self-financed Research & Development (R&D) expenses reached
EUR 2,939 million (FY 2009: EUR 2,825 million), driven mainly by increases
at Cassidian for the Unmanned Aerial Systems (UAS) and Systems businesses
and at Eurocopter across the product range. At Airbus, the increase in R&D
on the A350 XWB was compensated by decreases in other programmes,
especially the A380 and A330-200F.

Free Cash Flow before customer financing of EUR 2,644 million (FY 2009:
EUR 991 million) is significantly above expectations thanks to better
operational and inventory management performance and stronger pre delivery
payments at Airbus Commercial than expected. The improvement compared to
last year is driven by the working capital. At Airbus Commercial, inventory
reduction is driven by delivery patterns. The inflow of advances linked to
Airbus commercial activity in 2010 was stronger than expected and was above
2009, particularly in the fourth quarter, reflecting the increase in future
deliveries and commercial aircraft orders. This positive effect was more
than offset by lower advance payments at Astrium and Cassidian compared to
the 2009 level which was driven by exceptional order intake booked that
year. Due to a combination of appetite from lessors and banking market
recovery, customer financing generated a positive contribution of around
EUR 60 million compared to a 2009 outflow of EUR 400 million. Investing
activities consumed around EUR 2.3 billion, mainly as investment ramps up
on the A350 XWB programme. Free Cash Flow after customer financing amounted
to EUR 2,707 million (FY 2009: EUR 585 million).

EADS' Net Cash position amounted to EUR 11.9 billion (year-end 2009:
EUR 9.8 billion) after a EUR 553 million contribution to pension fund
assets.
It continues to be a solid foundation for the Group's operational needs as
well as future growth.

The Group's order intake(4) of EUR 83.1 billion was significantly higher
than one year ago (FY 2009: EUR 45.8 billion), driven by the higher level
of commercial aircraft orders at Airbus. Net orders of 574 aircraft include
32 A380s and 78 A350 XWB. By the end of December 2010, EADS' order book(4)
stood at a record EUR 448.5 billion
(year-end 2009: EUR 389.1 billion), reflecting the improved commercial
aircraft momentum. The Airbus Commercial order book also benefited from a
positive revaluation impact of around EUR 25 billion due to the
strengthening value of the U.S. dollar against the euro at the end of
December 2010 compared to the end of December 2009. The defence order book
stood at EUR 58.3 billion (year-end 2009:
EUR 57.3 billion).

At the end of December 2010, EADS' workforce consisted of 121,691 employees
(year-end 2009: 119,506).

Outlook

EADS' 2011 guidance is based on an assumption of EUR 1 = $ 1.35 for average
and year-end closing spot rates.

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 EUR 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, the reported EBIT* and 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 EUR 1 = $ 1.35, EADS expects 2011 EPS to be above the 2010 level of EUR
0.68.

Free Cash Flow is expected to be positive. It is the most volatile item and
EADS will give a more precise guidance later in the year.

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 EUR 45.8 billion and employed a workforce of nearly
122,000.

Contacts:

Pierre Bayle +33 1 42 24 20 63
Alexander Reinhardt +49 171 76 50 320
Martin Agüera +49 175 227 43 69
Philipp Lehmann +49 151 151 42 921

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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 Berlin, Düsseldorf, Hamburg, Hannover, München, Stuttgart

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