EADS reports 2Q2013 financial highlights
EADS reports 2Q2013 financial highlights
X
31-Jul-2013
EADS Reports Solid Half-Year (H1) Results, Reaffirms 2013 Guidance
Revenues increase 6 percent to € 26.3 billion
• EBIT* before one-off rises 21 percent to € 1.6 billion
• Net Income rises 31 percent to € 759 million
• Group concludes strategy review, announces reorganisation, rebranding
EADS (stock exchange symbol: EAD) reported increased revenues and profitability for the first half of 2013, driven mainly by its commercial aircraft business.
Order intake(4) increased sharply to € 96.6 billion with the order book value reaching € 634.8 billion at the end of June. The reported EBIT* amounted to € 1.5 billion with a half-year Net Cash position of € 5.9 billion.
"We report a solid performance for the first six months and reaffirm our full year guidance," said EADS CEO Tom Enders. "Cash generation and programme execution are key management priorities for the second half of the year."
In the first half of 2013, EADS' revenues increased 6 percent to € 26.3 billion (H1 2012: € 24.9 billion), reflecting the aircraft delivery pattern at Airbus Commercial and broadly stable revenues at Eurocopter, Astrium and Cassidian combined. The Group's defence revenues were stable at € 5.0 billion.
EBIT* before one-off - an indicator capturing the underlying business margin by excluding material non-recurring charges or profits caused by movements in provisions related to programmes and restructurings or foreign exchange impacts - increased to € 1.6 billion (H1 2012: € 1.3 billiona) for EADS and to € 1.2 billion for Airbus (H1 2012: € 845 milliona). This improvement reflected the good operational performance at Airbus Commercial. The Group EBIT* before one-off margin improved to 6.1 percent.
EADS' reported EBIT* increased to € 1.5 billion (H1 2012: € 1.1 billiona) and included € 136 million in one-off charges at Airbus. This comprised € 28 million in expected charges related to the A380 wing rib feet repair based on H1 deliveries with the remaining € 108 million for the pre-delivery payment (PDP) dollar mismatch and balance sheet revaluation.
The finance result amounted to € -407 million (H1 2012: € -239 million) while net income(3) increased to € 759 million (H1 2012: € 579 milliona), or earnings per share of € 0.94 (earnings per share H1 2012: € 0.71a). The H1 2013 EPS were impacted mainly by a negative foreign exchange revaluation of around € 170 million.
Self-financed Research & Development (R&D) expenses were stable at € 1,414 million (H1 2012: € 1,425 million).
Free Cash Flow before acquisitions amounted to € -4,143 million (H1 2012: € -1,746 million), reflecting the ramp-up in working capital at Airbus and Eurocopter and the seasonality of the Group's governmental business. Capital expenditure of € 1.4 billion was mainly driven by progress on A350 XWB development aircraft and includes development costs capitalised under IAS 38 of € 130 million for the A350.
EADS finished the first half of 2013 with a Net Cash position of € 5.9 billion (year-end 2012: € 12.3 billion) after taking into account the € 1.8 billion used to fund the share buyback programme and the 2012 dividend payment of € 468 million.
EADS' order intake(4) more than tripled to € 96.6 billion (H1 2012: € 28.2 billion), as the strong momentum continued into the second quarter, particularly at Airbus Commercial. The Group's defence and space business continued to take orders although at a slower pace than in 2012. By the end of June 2013, the total order book(4) had risen in value to € 634.8 billion (year-end 2012: € 566.5 billion). The defence order book amounted to € 48.2 billion (year-end 2012: € 49.6 billion).
As of 30 June 2013, EADS had 143,358 employees (year-end 2012: 140,405).
Strategy Review Update
In recent months, EADS conducted a strategy review, which paved the way for two important Board decisions. Firstly, the Group plans to integrate Airbus Military, Astrium and Cassidian into one Defence and Space Division. Secondly, the Group will enhance integration and cohesion by renaming the Group and its Divisions using the globally recognised Airbus brand.
The Airbus Group will consist of three Divisions:
• Airbus, responsible for all commercial aircraft activities;
• Airbus Defence & Space, home to the Group's defence and space activities including Military Transport Aircraft;
• Airbus Helicopters, comprising all commercial and military helicopter activities.
Pooling the space and defence entities Airbus Military, Astrium and Cassidian is the Group's response to the changing market environment with flat or even shrinking defence and space budgets in the Western hemisphere. This structural change will provide optimised market access, cost and market synergies and improved competitiveness overall. It will also provide better visibility on the European leader in space and defence.
Airbus Helicopters, with its civil and military products, will remain unchanged. The rotorcraft technology is very particular and it's necessary to maintain the strong synergies between civil and military products.
Implementation is planned to start step-by-step on 1 January 2014 and will be completed in the second half of 2014. It is designed to support the Group's Flightpath 2015 for improved shareholder returns.
Several regulatory milestones, works council consultations and other approval procedures have to be accomplished before the changes can come into full effect.
Airbus Defence & Space will be a division with around 45,000 employees and an annual turnover of about € 14 billion and will be headquartered in Munich, Germany. The Chief Executive Officer of Airbus Defence & Space will be Bernhard Gerwert (aged 60) and it will consist of four business segments - Military Aircraft, headed by Domingo Ureña-Raso (55), Space Systems, headed by François Auque (57), Communication, Intelligence & Security Systems, headed by Evert Dudok (54) and Equipment, headed by Thomas Müller (55). Julian Whitehead (50) will be the Division's Chief Financial Officer.** Further nominations will be announced in September and October.
Tom Enders commented: "What we are unveiling today is an evolution, not a revolution. It's the next logical step in the development of our company. We affirm the predominance of commercial aeronautics in our Group and we restructure and focus our defence and space activities to take costs out, increase profitability and improve our market position. The renaming simply gathers the entire company under the best brand we have, one that stands for internationalisation, innovation and integration - and also for some two thirds of our revenues. It reinforces the message that 'we make things fly'."
The Group will communicate further details in the fourth quarter.
Outlook
Based on the H1 2013 results, EADS reaffirms its full year guidance for all Key Performance Indicators (KPIs) except the order intake at Airbus Commercial which has been increased further.
As the basis for its 2013 guidance, EADS expects the world economy and air traffic to grow in line with prevailing independent forecasts and assumes no major disruptions.
In 2013, gross commercial aircraft orders should be above 1,000 aircraft. Airbus deliveries should continue to grow to between 600 and 610 commercial aircraft.
Due to lower A380 deliveries and assuming an exchange rate of € 1 = $ 1.35, EADS revenues should see moderate growth in 2013.
By stretching the 2012 underlying margin improvement, in 2013 EADS targets an EBIT* before one-off of € 3.5 billion and an EPS* before one-off of around € 2.50 (FY 2012: € 2.24), prior to the on-going share buyback.
Excluding the wing rib feet A380 impact of around € 85 million in 2013 based on 25 deliveries, going forward, from today's point-of-view, the "one-offs" should be limited to potential charges on the A350 XWB programme, foreign exchange effects linked to PDP mismatch and balance sheet revaluation.
The A350 XWB programme remains challenging. Any schedule change could lead to an increasingly higher impact on provisions.
An assessment of the need for potential one-off costs from the creation of Airbus Defence & Space will be conducted in the second half of 2013.
EADS aims to be Free Cash Flow breakeven after customer financing and before acquisitions in 2013.
EADS Divisions: Strong Momentum Continues At Airbus Commercial
Airbus' consolidated revenues increased to € 18,924 million (H1 2012: € 17,525 millionª) amid increased commercial and military aircraft deliveries. The Airbus consolidated EBIT* rose sharply to € 1,093 million (H1 2012: € 563 millionª) with net order intake rising to € 90.4 billion (H1 2012: € 21.2 billionª).
Airbus Commercial's revenues rose to € 18,235 million (H1 2012: € 16,864 millionª), reflecting the increase in Airbus series aircraft deliveries to 295 aircraft (H1 2012: 279 aircraft). Airbus Commercial's reported EBIT* amounted to € 1,092 million (H1 2012: € 558 millionª) with the EBIT* before one-off at € 1,228 million (H1 2012: € 840 millionª). Airbus Commercial's EBIT* before one-off benefitted from the better operational performance, including favourable volume and improved pricing.
Revenues at Airbus Military increased to € 1,067 million (H1 2012: € 843 million) with an EBIT* of € 10 million (H1 2012: € 2 million).
In the first six months of 2013, Airbus Commercial recorded 722 net aircraft orders (H1 2012: 230 net orders). It had a successful Paris Air Show, receiving firm orders for 241 aircraft. Strong momentum for the A350 XWB continued at the show with firm orders for 65 aircraft from Air France KLM, Singapore Airlines and United Airlines. Airbus also signed an agreement with new A380 customer, Doric Lease Corp., for 20 A380s. The A320 Family also scored well during the show, receiving firm orders for 170 aircraft including major deals with Lufthansa for 100 A320 Family aircraft, and with ILFC for an additional 50 NEOs. ATR meanwhile received 68 gross orders during the first half of 2013.
Airbus continues to make significant progress on the A350 XWB programme. Since the first flight in June, the entire flight envelope has been cleared and first tests of all major aircraft systems have been successfully performed. Airbus is now entering the most critical phase of the A350 programme. The industrial ramp up preparation is underway and risks related to the ramp up are being closely monitored in line with the schedule, aircraft performance and overall cost envelope.
Airbus Military received 8 net orders (H1 2012: 21 net orders) and delivered 12 aircraft (H1 2012: 7 aircraft). Airbus Military is in the very final discussions with OCCAR and the seven launch nations on the A400M Initial Operating Clearance (IOC) and Type Certificate. Notwithstanding contractual rights, discussions are progressing well. The IOC is a pre-requisite for the delivery of the first aircraft to France to follow within days. During the second quarter, Airbus Military delivered its 100th C295 transport & surveillance aircraft to Oman.
At the end of June, Airbus' consolidated order book was valued at € 595.8 billion (year-end 2012: € 525.5 billionª). The Airbus Commercial backlog amounted to € 575.7 billion (year-end 2012: € 505.3 billionª), which comprised 5,109 Airbus aircraft excluding ATR orders (year-end 2012: 4,682 units). Airbus Military's order book was worth € 20.8 billion (year-end 2012: € 21.1 billion).
Revenues at Eurocopter fell by 7 percent to € 2,584 million (H1 2012: € 2,771 million) as deliveries declined to 190 helicopters (H1 2012: 198 helicopters). The Division's EBIT* declined by 35 percent to € 128 million (H1 2012: € 198 millionª). Flight restrictions for the EC225 Super Puma weighed strongly on the operational performance as expected.
Eurocopter has now taken major steps towards the Super Puma recovery. The European Aviation Safety Agency (EASA) and Civil Aviation Authorities of the UK and Norway have now officially approved the prevention and detection solutions developed by Eurocopter for the EC225. Eurocopter is now supporting helicopter operators to return their fleets back to service.
Eurocopter's second quarter order intake included a contract for 34 NH90 Tactical Transport Helicopters (TTH) from France. The Division also delivered the first Tiger helicopter in the HAD attack configuration to France.
In the first six months of 2013, Eurocopter booked 167 net orders (H1 2012: 195 net orders). At the end of June 2013, the Division's order book was worth € 12.8 billion (year-end 2012: € 12.9 billion), comprising 1,047 helicopters (year-end 2012: 1,070 helicopters).
Astrium's revenues in the first half of 2013 were € 2,808 million (H1 2012: € 2,661 million) with an EBIT* of € 123 million (H1 2012: € 129 millionª). The EBIT* performance reflected progress in the launcher and satellites business while the competitive environment and budget constraints impacted order intake, revenues and margin growth in services.
Astrium demonstrated good programme execution with the fourth Automated Transfer Vehicle (ATV) successfully docking at the International Space Station following the 55th successful consecutive Ariane 5 launch. It also received an export contract to build a new telecommunications satellite for Russian operator RSCC.
Astrium's order intake in the first half of 2013 stood at € 1.9 billion (H1 2012: € 2.2 billion). As of 30 June 2013, the Division's order book was worth € 11.7 billion (year-end 2012: € 12.7 billion).
Cassidian's revenues were € 2,286 million (H1 2012: € 2,186 million) with an EBIT* of € 86 million (H1 2012: € 81 millionª). Programme execution was as planned and supported revenues and EBIT*. Border security projects remain challenging in terms of commercial and programme delivery.
Cassidian's restructuring programme announced in the fourth quarter of 2012 is on track. Major business highlights include the contract signature of the Eurofighter consortium in June to integrate the Meteor air-to-air missile system on board the fighter aircraft. Additionally, an important export contract in the Tornado Sustainment Programme was awarded in the aircraft missile business.
Net order intake fell to € 2.0 billion (H1 2012: € 2.8 billion). At the end of June, Cassidian's order book was worth € 15.1 billion (year-end 2012: € 15.6 billion).
* 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.
** Note to editors: Bernhard Gerwert is currently CEO of Cassidian; Domingo Ureña-Raso is Head of Airbus Military; François Auque is CEO of Astrium; Evert Dudok is CEO of Astrium Services; Thomas Müller is Head of Astrium Satellite Products; and Julian Whitehead is CFO of Cassidian.
a. Certain first half 2012 and year-end 2012 figures have been restated to reflect the change to pension accounting under IAS 19 while Airbus' figures also reflect the inclusion of ATR and Sogerma within Airbus Commercial. ATR and Sogerma were formerly included in
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