European Aeronautic Defence and Space Company / Final Results
10.03.2009
Release of a Adhoc News, transmitted by DGAP - a company of EquityStory AG.
The issuer is solely responsible for the content of this announcement.
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Ad-hoc release, 10 March 2009
EADS - FY 2008 results
Solid EADS 2008 results provide resilience in difficult global economic
environment
- Group EBIT* of EUR 2.8 billion - supported by excellent underlying
performance, significant positive foreign currency effects but burdened
by programme charges
- Net Income of EUR 1,572 million (FY 2007: EUR -446 million)
- Free Cash Flow exceeded expectations with EUR 2.6 billion
- Robust balance sheet with Net Cash at a record level of EUR 9.2 billion
- Revenues increased by 11 percent to EUR 43.3 billion
- Order book grew 18 percent to a record of EUR 400 billion
- Dividend proposal of EUR 0.20 per share
- A400M issues with customers and suppliers pending
EADS (stock exchange symbol: EAD) achieved satisfying results for the full
year 2008 delivering an EBIT* of EUR 2.8 billion. The Group benefited from
its strong underlying performance and foreign currency effects while
dealing with challenges in critical programmes. EADS' order book achieved a
new record of more than EUR 400 billion, Net Cash reached an unprecedented
level of EUR 9.2 billion thanks to better than expected Free Cash Flow
generation.
EADS is in a good position to face the crisis, although the Group is facing
a low level of visibility for the second half of 2009 and beyond due to the
global economy and financial market weakness which is increasingly
impacting air traffic.
'We have achieved a number of significant accomplishments. The Group
achieved a solid EBIT* and an outstanding cash performance. We made
significant headway in reshaping the company,' said Louis Gallois, CEO of
EADS. 'Even if the A400M programme required enormous attention, the Group
has regained stability in 2008 and is proving to be resilient in the face
of the turbulent global economic environment. 2009 will be a very
challenging year for our industry, but we can rely on an extremely
motivated workforce and an excellent portfolio of products. Thanks to our
large and well diversified order book 2009 deliveries should remain at high
levels, and will give us room for manoeuvre. Cash protection is key.'
The Group achieved high levels of deliveries in 2008: Airbus handed over
483 aircraft to its customers - more than ever before. That figure includes
12 A380s. Eurocopter also achieved a new record, delivering 588
helicopters.
EADS recorded strong order intake across its product portfolio. Airbus
received 777 net aircraft orders and Eurocopter booked 715 new helicopters.
Good order intake in the defence businesses especially for tankers led to a
stable defence order book of around EUR 55 billion, providing the basis for
a
more balanced business in the years to come. The Group's space and defence
businesses continued to grow profitability demonstrating the robust
competitive position they have achieved through innovation and efficiency
measures.
In January 2009, EADS announced it had proposed to the launch nations a new
approach for the A400M aimed at finding a way forward for this programme.
With this proposed new approach, the first delivery of the A400M would
occur three years after its first flight. In line with complex military
development programmes, EADS suggested to resume series production only
once adequate maturity is reached as indicated by flight test results. EADS
continues to address the industrial challenges of this programme and
continues to elaborate their impacts on the A400M delivery schedule. EADS
is still working with the suppliers of the propulsion system to determine a
reliable date of engine availability and a first flight date for the A400M.
On a wider level, EADS is working with subcontractors for the engines and
mission critical systems to update its own delivery schedule.
In 2008, EADS' EBIT* was impacted by EUR -704 million related to the
A400M programme. EADS will only be able to update all of the financial
consequences of a revised industrial plan, once the availability of the
engines and mission critical systems is firmly determined or once OCCAR's
position on the proposal made by EADS is known.
As already communicated with the 9-months 2008 results, the unavailability
of a reliable schedule update on the A400M programme led EADS to apply the
early stage method of accounting until certain events allow the resumption
of the estimate at completion method. **
As the A400M will not perform its first flight before the end of March
2009, the launch customer OCCAR has the contractual right to claim
termination of the entire A400M Launch Contract as of 1 April 2009. This
termination may only be obtained with a unanimous mandate of all launch
nations, which makes it very unlikely according to the assessment of the
EADS management. Theoretically, a cancellation of the A400M contract by
OCCAR would trigger reimbursement of the pre-delivery payments and other
payments received from OCCAR. The total amount is approximately EUR 5.7
billion. Separately, each of the launch nations may claim cancellation of
those individual aircraft which would be substantially delayed.
EADS has adjusted its divisional structure. The former Military Transport
Aircraft Division is being integrated into Airbus and will become - under
the name of Airbus Military - the military pole of Airbus. This will
strengthen programme management in particular for the A400M and improve
resource allocation. This new organisation is effective as of 2009. EADS is
therefore disclosing its 2008 results according to the former divisional
structure, thus still reporting the Military Transport Aircraft Division
separately.
Revenues rose strongly by 11 percent to EUR 43.3 billion (FY 2007:
EUR 39.1 billion) reflecting top line growth from operations across all
Divisions. The increase includes EUR 1.1 billion resulting from the move to
the early stage accounting methodology in the A400M programme applied
starting in the third quarter of 2008. The Group's revenue growth more than
offset a weaker average US dollar rate. Based upon a strong delivery
performance,
EADS achieved 56 percent of its revenues outside Europe thanks to strong
contributions from Asia-Pacific (25 percent), North America (18 percent)
and other regions (13 percent).
EADS' EBIT* (pre goodwill and exceptionals) for the full year of 2008
improved to EUR 2,830 million compared to EUR 52 million in the previous
year,
when Airbus' EBIT* in particular was burdened by higher exceptional charges
(Power8, A400M, A350 XWB). This EBIT* growth contains around
around EUR 900 million resulting from the revaluation of loss-making
contracts at the EUR/US$ and £/US$ closing spot rates. The stronger EBIT*
resulted from improvements across all Divisions. At Airbus, strong
operational performance in series programmes, achievement of Power8 cost
savings and lower exceptional charges than in the previous year contributed
positively to EBIT* growth. The Military Transport Aircraft Division's
EBIT* improvement was due to a ramp-up in tanker activity and lower
exceptional charges than in the previous year. Eurocopter's EBIT* increase
reflects the positive volume effect and better pricing. Both Astrium and
the Defence & Security Division increased EBIT* and reached record
profitability.
In line with the Group's EBIT* development, EADS improved its Net Income to
EUR 1,572 million (FY 2007: EUR -446 million), or earnings per share to EUR
1.95
(earnings per share FY 2007: EUR -0.56). Self-financed R&D expenses
remained
stable at EUR 2,669 million (FY 2007: EUR 2,608 million). This reflects
Airbus'
and Eurocopter's continuing aircraft development programmes.
Free Cash Flow before customer financing was stronger than expected and
reached EUR 2,886 million (FY 2007: EUR 3,293 million). The change resulted
mainly from the higher level of advance payments received in 2007 (incl.
Paradigm refinancing step-up of EUR 1.1 billion), partly compensated by
positive contributions from tanker programmes. Due to some customer
financing needs,
Free Cash Flow including customer financing stood at EUR 2,559 million (FY
2007:
EUR 3,354 million). Despite a cash-out for contribution to plan assets of
pension schemes and premium for options, the Net Cash position reached a
record
EUR 9.2 billion (year-end 2007: EUR 7.0 billion). This gives EADS a robust
liquidity base in economically turbulent and unpredictable times.
The Group's improved operational performance in legacy programmes and the
strong cash development drove earnings per share to EUR 1.95 and justify
the
increase in dividend. The Board of Directors is proposing to the
Annual General Meeting of shareholders a dividend of EUR 0.20 per share
(gross amount dividend per share 2007: EUR 0.12). Subject to the
Annual General Meeting approval, the dividend will be paid on 8 June 2009.
EADS CFO Hans Peter Ring commented: 'The amount of the dividend
acknowledges the turbulent economic environment and the risk in the
A400M programme, but recognises the loyalty of EADS shareholders and
reflects our confidence in the Group's solidity through 2009 and beyond.'
A remarkable order intake of EUR 98.6 billion (FY 2007: EUR 136.8 billion),
supported by strong order flow in all Divisions - including the important
UK tanker order - underlines the attractiveness of EADS' product offering
across its entire portfolio. At the end of December 2008, EADS' order book
reached a record level of EUR 400.2 billion (year-end 2007: EUR 339.5
billion).
The growth in order book benefited EUR 10 billion from a favourable US
dollar
spot rate at the end of December 2008 compared to year-end 2007. Orders
within the commercial aircraft business are based on list prices. Strong
order intake in the defence businesses led to a stable defence order book
of EUR 54.9 billion
(year-end 2007: EUR 54.5 billion). At the end of December 2008, EADS had
118,349 employees (year-end 2007: 116,493).
In 2008, EADS continued to improve its Group-wide efficiency. The Power8
restructuring programme again exceeded its targets and delivered gross cost
savings of EUR 1.3 billion; the targets for 2010 remain unchanged. Cost
saving programmes of other Divisions are on track, and the Power8 Plus
programme is to deliver a further annual EBIT* benefit of EUR 1 billion
from
across the Group in 2011 to 2012. In addition, EADS has initiated a further
integration and cost savings plan called 'Future EADS' at a minimum level
of EUR 200 million in 2011-2012. It aims at further integration,
improvement
of decision making processes and cost savings through the Headquarters, the
Divisions and the interaction between Headquarters and the Divisions.
The former Military Transport Aircraft Division will be integrated into
Airbus to facilitate a greater level of overall programme management
efficiency, and a coordination of the Astrium and EADS Defence & Security
Divisions is established. It will ensure a consistent approach towards
common customers and foster the development of commercial, technical and
strategic synergies.
In its divestment strategy EADS recorded major achievements. The sale of
the site in Laupheim (Germany) to Diehl/Thales and the sale of the
manufacturing unit of the site in Filton (UK) to GKN were completed. The
sites in Augsburg, Nordenham and Varel (Germany) were merged into Premium
AEROTEC and the sites in Meaulte and St. Nazaire Ville (France) into
Aerolia. Both companies became fully operational as of 1 January 2009. They
are well positioned to become major players on the global market.
Furthermore, EADS has sold a
70 percent majority stake in EADS Socata to DAHER.
'Despite the difficult environment in 2008, EADS continued to turn its
Vision 2020 into action. We kept a sharp focus on the Group's integration
particularly through the introduction of shared services, fostered
innovation efforts in the field of eco-efficiency and strengthened our
presence in the defence and service business in the US. Current
circumstances confirm the validity of the Vision 2020 objective of
achieving a better balanced portfolio of activities inside EADS,' said
Louis Gallois.
Outlook
EADS has begun 2009 with a mixed level of visibility. At Airbus, visibility
is satisfactory for the first half of the year, but the level of
uncertainty increases beyond the first half. The Group's bottom-up analysis
is supported by the order book and the recent decision to adjust production
rates of single-aisle aircraft to 34 aircraft per month from October 2009
onwards; the ramp-up for the long range Family was frozen at 8.5 aircraft
per month. This analysis shows overbooking for the next years.
Nevertheless, the order book is challenged by the deterioration of the
macroeconomic and traffic indicators. Therefore, EADS is carefully
monitoring the market, its customer base and its suppliers. As a result,
the management is applying a rolling plan concept. Besides the commercial
order book, the Group's defence and institutional order book provides a
certain level of protection and stability.
EADS expects Airbus to capture between 300 and 400 new gross orders in
2009, which is challenging taking into account the current market
conditions. Based on a stable delivery assumption and a US dollar rate of
EUR 1 = US$ 1.39, EADS revenues should roughly be in line with the
2008 level.
Under these assumptions, EBIT* before one-offs should be down in 2009 but
significantly positive and supported by robust underlying performance.
Revised industrial plans to complete the A400M programme could lead to a
significant charge, weighing on EBIT*, depending on the outcome of
negotiations with customers and suppliers. EBIT* will be negatively
impacted by increased Research & Development (R&D) expenses, by significant
hedging deterioration, price deterioration, increasing customer financing
and in-service support costs compared to 2008, partly offset by further
Power8 cost savings.
Free Cash Flow for 2009 will reflect some negative impacts from lower
customer advance payments at Airbus and some build-up of inventory in the
fourth quarter of 2009, reflecting the reduction of the single-aisle
production rate. EADS expects to support customers in financing their
deliveries on a discretionary basis in 2009. The cash consumption of
provisions taken over recent years will also weigh on the cash flow. At
this stage, with the current level of visibility, EADS is not expecting to
consume more than EUR 1.5 billion of Free Cash Flow after customer
financing
in 2009.
As soon as the Group has better visibility on the outcome of the A400M
discussions and the development of its commercial markets EADS will update
its guidance more precisely.
* 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.
** As the outcome of the A400M construction contract cannot be estimated
reliably, EADS can currently not comply with all requirements to account
for the contract under the estimate-at-completion accounting methodology.
Consequently and in accordance with IAS 11 (Construction Contracts), EADS
has suspended the application of estimate at completion methodology
accounting ('milestone accounting') and has then recognised contract costs
incurred to date as an expense directly in the income statement as well as
corresponding revenues as far as such contract costs incurred are expected
to be recoverable under the 'early stage' method of accounting. The
loss-at-completion provision was then updated only to cover additional
losses under the contract which EADS was able to estimate reliably.
Contact:
Edmund Reitter +49 89 607 34510
DGAP 10.03.2009
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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
End of News DGAP News-Service
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DGAP-Adhoc: European Aeronautic Defence and Space Company: Solid EADS 2008 results provide resilience in difficult global economic environment
| Source: EQS Group AG