Airbus SE — Earnings Release 2012

May 16, 2012

News Details

Ad-hoc | 16 May 2012 07:00

European Aeronautic Defence and Space Company EADS N.V.: On Track: EADS Reports First Quarter (Q1) Results 2012

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

16.05.2012 07:00

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Ad-hoc release, 16 May 2012

On Track: EADS Reports First Quarter (Q1) Results 2012
- Revenues climb 16 percent to EUR 11.4 billion

• EBIT* before one-off up 109 percent: EUR 480 million

• Net Income* before one-off(4) increases 156 percent to EUR 259 million

• Free Cash Flow of EUR -1.2 billion: deterioration due to phasing of
  deliveries and on-going production ramp-up

• Airbus defines permanent fix to A380 wing rib feet issues, leading to a
  one-off charge in the first quarter of EUR 158 million

• EADS adds close to $ 10 billion of new hedges in the first quarter

• Earnings per Share* before one-off(4) guidance raised to above EUR 1.85

EADS (stock exchange symbol: EAD) delivered a good start to the year with a
solid financial performance in the first quarter, particularly thanks to
the continued strong commercial momentum. As anticipated, defence markets
in the Western world continue to be strained. However, the momentum of
EADS' institutional and governmental business in the first three months was
encouraging. Order intake(5) in the first three months reached EUR 12.0
billion. At the end of March, EADS' order book(5) stood at EUR 526.2
billion. Revenues amounted to EUR 11.4 billion. The EBIT* before one-off of
around EUR 0.5 billion benefited from good performance in Airbus,
Eurocopter and Astrium while Cassidian remained stable. The reported EBIT*
amounted to EUR 0.3 billion. The Net Cash position remained robust at EUR
10.7 billion.

'Demand for commercial aircraft and civil helicopters remains healthy and
our institutional business fared reasonably well despite European budget
pressures and an uncertain economic environment. This led to
better-than-expected revenues and EBIT* before one-off in the first
quarter, which strongly confirms the level of our 2012 performance targets.
Moreover, the Airbus team has found a permanent solution to the A380 wing
rib feet issues', said Louis Gallois, CEO of EADS. 'As we transition to the
new leadership team, management will continue to have its sights set on key
programmes, particularly A380, A350 and A400M heading towards the
in-service phase. We will also continue to seek a satisfactory outcome to
discussions on the future of government programmes.'

In the first three months, EADS' revenues increased 16 percent to EUR 11.4
billion (Q1 2011: EUR 9.9 billion) with more favourable phasing than in Q1
2011.
The growth in revenues is primarily driven by increased activity across all
Divisions. Defence revenues increased by 18 percent. Deliveries continued
to be at a high level with 131 aircraft at Airbus Commercial, 72 helicopters
at Eurocopter and the 47th 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 EUR 480 million
(Q1 2011: around EUR 230 million) for EADS and at around EUR 320 million for
Airbus (Q1 2011: around EUR 160 million). Compared to Q1 2011, the EBIT*
before one-off improvement was driven by the profitability of Airbus series
programmes combined with A380 improvement despite higher Research &
Development and hedge rate deterioration of matured hedges. Favourable mix
and pricing at Eurocopter and the contribution of Vizada at Astrium also
contributed to the Group's EBIT* before one-off improvement. Finally, the
EBIT* before one-off also improved at Headquarters due to positive Group
elimination and increased allocation of management fees to Divisions.

During the first quarter, EADS implemented close to $ 10 billion of new
hedges at an average rate of EUR 1 = $ 1.32, which enhances stability of
the Group's future financial performance. At the end of March, EADS' total
hedge portfolio stood at $ 80.3 billion.

EADS' reported EBIT* increased to EUR 343 million (Q1 2011: EUR 192
million), driven by the improvement of the EBIT* before one-off. This
quarter, the dollar mismatch and balance sheet revaluation had a positive
impact on the EBIT* of around EUR 20 million. The A380 wing rib technical
fix is now defined. The implementation of the retrofit fix will have a
negative cost impact, which led EADS to take an additional charge of
EUR 158 million as a one-off to cover the repair costs of the 71 aircraft
delivered at the end of March.

Net Income rose to EUR 133 million (Q1 2011: EUR -12 million), or earnings
per share of EUR 0.16 (earnings per share Q1 2011: EUR -0.01). The Net
Income* before one-off(4) increased to EUR 259 million (Q1 2011: EUR 101
million). These increases are mainly driven by the operational improvement
reflected in the EBIT*, which is flowing down to the Net Income.

The finance result amounts to EUR -143 million (Q1 2011: EUR -197 million).
The interest result of EUR -73 million (Q1 2011: EUR -47 million)
deteriorated compared to the 2011 level, mainly due to lower interest
income related to the lower gross cash level and a reduction of the average
interest rate compared to last year. Meanwhile, the other financial result
improved by EUR 80 million to EUR -70 million (Q1 2011: EUR -150 million).
Important changes come from a revaluation impact of EADS' foreign exchange
options and a less negative revaluation impact of US dollar and GBP assets
compared to the year before. In Q1 2012, the closing spot rate deteriorated
by 5 cents to EUR 1 = $ 1.34 at the end of March compared to EUR 1 = $ 1.29
at the end of December 2011, while the year before the deterioration was 8
cents.

Self-financed Research & Development (R&D) expenses increased to EUR 726
million (Q1 2011: EUR 650 million), driven mainly by development on
the A350 XWB at Airbus and product line investment at Eurocopter. Following
the start of the A350 XWB final assembly in April, capitalisation of R&D
according to IAS 38 will start in the second quarter.

Free Cash Flow before customer financing amounted to EUR -1,303 million
(Q1 2011: EUR 208 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 are back-loaded, especially on A380. Customer
financing generated cash of EUR 65 million in the quarter as lessors and
banks retained appetite for aircraft assets. The level of capital
expenditure increased compared to last year, mainly at Airbus and
Eurocopter. Free Cash Flow after customer financing stood at EUR -1,238
million (Q1 2011: EUR 309 million).

The Net Cash position of EADS amounted to EUR 10.7 billion (year-end 2011:
EUR 11.7 billion).

EADS' order intake(5) increased by 92 percent to EUR 12.0 billion (Q1 2011:
EUR 6.3 billion), mainly due to the A320neo order intake at Airbus. It also
includes an encouraging EUR 1.8 billion order intake at Cassidian. At the
end of March 2012, the Group's order book(5) remains strong at EUR 526.2
billion (year-end 2011:
EUR 541.0 billion), supporting future growth. The Airbus Commercial backlog
has been reduced by a negative revaluation impact of around EUR 13 billion
due to the deterioration of the US dollar closing spot rate since the
year-end 2011. The defence order book stood stable at
EUR 51.9 billion (year-end 2011: EUR 52.8 billion).

At the end of March 2012, EADS' workforce consisted of 134,614 employees,
(year-end 2011: 133,115).

Outlook

For all items apart from Earnings per Share (EPS)* before one-off(4), EADS
confirms the guidance given in March 2012 based on an assumption of EUR 1 =
$ 1.35 for year-end closing spot rates.

In 2012, Airbus should deliver around 570 commercial aircraft, including a
targeted 30 A380 deliveries. Gross orders should be above the number of
deliveries. EADS 2012 revenues should continue to grow well above 6
percent. Group EBIT* before one-off should improve significantly thanks to
volume increases at Airbus and Eurocopter, better pricing at Airbus and
A380 improvement. With increased confidence EADS expects the 2012 EBIT*
before one-off to be above EUR 2.5 billion. Based on the first quarter
achievements and an expected tax rate for the full year slightly below 30
percent, the EADS 2012 EPS* before one-off(4) should now be above EUR 1.85
(FY 2011: EUR 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 its
customers. Based on this EBIT* guidance and the target delivery plan, EADS
should continue to generate a positive Free Cash Flow after customer
financing and before acquisitions. As it is the most volatile item,
especially during uncertain macro-economic times, EADS will give a more
precise guidance later in the year.

* 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
2011, the Group - comprising Airbus, Astrium, Cassidian and Eurocopter -
generated revenues of EUR 49.1 billion and employed a workforce of over
133,000.

Contacts:
Alexander Reinhardt +49 171 765 0320
Martin Agüera +49 175 227 4369
Matthieu Duvelleroy +33 629 431 564
Philipp Lehmann +49 151 151 42921

www.eads.com

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Language: English
Company: European Aeronautic Defence and Space Company EADS N.V.
P.O. Box 32008
2303 DA Leiden
Netherlands
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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