European Aeronautic Defence and Space Company EADS N.V. / Half Year Results
28.07.2009
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, 28 July 2009
EADS Reports First Half-Year Results
- Strong Airbus deliveries of 254 commercial aircraft
- EBIT* before one-off: EUR 1.3 billion
- EBIT* of EUR 888 million
- Net Income generation of EUR 0.4 billion
- Solid Net Cash position of EUR 8.1 billion
- Raising Free Cash Flow guidance 2009
- Negotiations on A400M with customers entering new phase
EADS' (stock exchange symbol: EAD) half-year 2009 results demonstrate that
the Group is still performing well across its businesses. In doing so, EADS
continues to actively monitor its customer base and its significant order
book of more than EUR 390 billion. The order intake of EUR 17.2 billion
reflects the slowdown in the commercial sector. Revenues stood at
EUR 20.2 billion, EBIT* before one-off at EUR 1.3 billion. EADS' half-year
EBIT* of EUR 888 million was mainly burdened by foreign exchange effects.
The Net Cash Position remains solid at EUR 8.1 billion. Thus, in the
current phase of limited economic visibility, EADS continues to be well
positioned to face the crisis.
'Thanks to our robust business and our disciplined financial management,
EADS is in good shape. At the same time, challenges in new programmes
remain and have to be addressed. We are sticking to our priorities:
protecting cash, managing the order book and deliveries and ensuring that
EADS is competitively positioned in its different market segments. This was
demonstrated by our recent win of the Saudi Arabia border security
contract,' said Louis Gallois, CEO of EADS. 'We welcome the commitment of
our A400M launch customers to the programme. In partnership with our
customers and our suppliers we are now continuing to work hard in order to
bring the A400M back on track.'
Group revenues slightly increased by 2 percent to EUR 20.2 billion (H1
2008: EUR 19.7 billion). At Airbus, deliveries remained at a high level
thanks to an improved second quarter compared to previous year. Revenues
were negatively impacted by foreign exchange effects and an unfavourable
mix including low A380 deliveries. The Astrium Division in particular
contributed to increased Group revenues.
Based on a strong Q2 EBIT* - which increased by nearly 70 percent compared
to previous year - EADS recorded an H1 EBIT* of EUR 888 million (H1 2008:
EUR 1.16 billion). The EBIT* was mainly burdened by exceptional negative
foreign exchange impacts. Before these exceptionals, EBIT* before one-off
stood at EUR 1.3 billion (H1 2008: EUR 2.0 billion). Compared to previous
year, EBIT* before one-off was weighed down by price deterioration on
aircraft deliveries and degradation of hedge rates, partially mitigated by
volume and Power 8 savings. A380 costs are still higher than expected.
The Group achieved a Net Income of EUR 378 million (H1 2008: EUR 403
million), or earnings per share of EUR 0.47 (earnings per share H1 2008:
EUR 0.50). Self-financed R&D expenses slightly increased to EUR 1,172
million (H1 2008: EUR 1,130 million). This reflects Airbus' continuing
aircraft development programmes as well as the Group's innovative momentum.
Free Cash Flow before customer financing dropped to EUR -948 million (H1
2008: EUR 894 million). The change compared to the same period of the
previous year, in which the Free Cash Flow benefited from strong inflow of
customer advance payments, reflects the deterioration of the working
capital and the decrease of gross cash flow from operations in line with
the reduction of the EBIT* before one-off and lower hedging volume. The
working capital deterioration is due to inventory build-up at Airbus and
the retention of customer advance payments for the A400M programme. The
outflow for the A400M amounts to EUR -400 million. Pre-delivery payments
received in H1 2009 remain in line with the H1 2008 level. Despite the
currently unfavourable market environment customer financing needs remain
limited in the first half. Therefore, Free Cash Flow including customer
financing amounts to EUR -1,169 million (H1 2008: EUR 975 million). The
Group's Net Cash position is solid at EUR 8.1 billion (year-end 2008: EUR
9.2 billion) representing a strong asset in the current situation of
limited economic visibility.
Due to lower commercial aircraft and helicopter orders, relating to the
current economic climate, the Group's order intake decreased to EUR 17.2
billion (H1 2008: EUR 51.2 billion). Up to the end of June 2009, EADS'
order book remained high at EUR 391 billion (year-end 2008: EUR 400.2
billion), including a EUR -4.3 billion revaluation due to the weaker US
dollar at the end of June compared to end of December 2008. Orders within
the commercial aircraft business are based on list prices. Robust order
intake in the defence business led to a stable defence order book of EUR
55.2 billion (year-end 2008: EUR 54.9 billion). At the end of June 2009,
EADS had 117,661 employees (year-end 2008: 118,349).
The customer OCCAR and the launch nations have reiterated their commitment
to the A400M: On 24 July, they confirmed that they will adhere to the A400M
programme to enable further detailed negotiations up to the end of year.
This provides an opportunity for all parties involved to realign the
programme on an achievable basis. EADS is using this phase to carry on with
its suppliers and partners to establish a robust timetable including a date
for the first flight. Furthermore, this period gives room to rebase the
contract on realistic conditions acceptable to all parties. EADS intends to
reduce any further potential loss, but the full financial consequences of
the delays will only be known once the negotiations are finalised.
Over the last months, the programme made further progress. The first A400M
development aircraft is being prepared for engine fitting. The second
aircraft is assembled and has entered systems testing phase while final
assembly for the third unit has started. The flying test bed for the engine
has successfully performed twelve flights with more than 35 flight hours. A
first version of the revised engine software FADEC was received and is
showing good initial results in testing.
Due to the continuing high level of uncertainty on the programme,
EADS retained the early stage accounting treatment of this programme.**
This resulted in an EBIT* impact of EUR -191 million for the first six
months (thereof EUR -120 million taken in the first quarter).
Substantial negative income statement impacts may still have to be booked
in future periods depending on the progress of the development and the
outcome of the negotiations on the A400M programme.
Outlook
The first half of 2009 confirms the trends identified at the beginning of
the year. The Group's bottom-up analysis of the order book still shows
overbooking for the coming years. Nevertheless, this is challenged by the
deterioration of the macro-economic and traffic indicators, even if the
negative trend was stopped or slightly reversed recently. There is no clear
sign of stabilisation since traffic and yield deterioration as well as
funding conditions are challenging airlines' financials. Therefore, EADS is
cautiously monitoring the market, its customer base and its suppliers and
continues to apply a rolling plan concept. Besides the commercial order
book, the Group's solid defence and institutional order book provides a
certain level of protection and stability.
EADS expects Airbus to capture up to 300 new gross orders in 2009, even if
that goal is challenging in the current market environment. Based on the
healthy H1 delivery trend, deliveries of 2009 should be at least at the
2008 level. With an assumption of a US dollar rate of EUR 1 = US$ 1.39,
EADS revenues should be roughly in line with the 2008 level.
Under these assumptions, EBIT* before one-off in the second half of 2009
should be positive but lower compared to the first half of 2009. Compared
to the first six months of the year, it will be negatively impacted, mainly
by increasing Research & Development expenses and significant hedge rates
deterioration. EADS R&D expenses should amount to roughly EUR 3 billion for
the full year. On the other side, this degradation will be partly offset by
a lower price deterioration than in H1 and by favourable seasonal effects
on part of the business. Concerning one-off impacts affecting H2, the range
and magnitude of the potential A400M programme charge is wide. Finally,
A380 ramp-up is progressing and Airbus expects to deliver 14 A380 in 2009.
A380 costs are still higher than expected and EADS will review the
potential impact on the learning curve in H2.
EADS is raising its Free Cash Flow guidance. EADS is now expected to
consume around EUR 1 billion of Free Cash Flow after customer financing in
2009 not taking into account the A400M programme.
* 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
cost-at-completion provision was then updated only to cover additional
losses under the contract which EADS was able to estimate reliably. (For
more details refer to the 'First Half-Year
2009 Financial Report').
Contact:
Edmund Reitter +49 89 607 34510
Alexander Reinhardt +33 1 42 24 2757 / +49 89 607 34066
DGAP 28.07.2009
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Language: English
Issuer: 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, Hannover, München, Hamburg,
Stuttgart
End of News DGAP News-Service
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DGAP-Adhoc: EADS Reports First Half-Year Results
| Source: EQS Group AG