Ad-hoc: EADS Reports Solid Half-Year (H1) Results, Reaffirms 2013 Guidance
Amsterdam, 31 July 2013
• 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.
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 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
EADS is a global leader in aerospace, defence and related services. In 2012, the Group – comprising Airbus, Astrium, Cassidian and Eurocopter – generated revenues of € 56.5 billion and employed a workforce of over 140,000.
EADS – Half-Year (H1) Results 2013
(Amounts in euro)
EADS – Second Quarter Results (Q2) 2013