European Aeronautic Defence and Space Company / Half Year Results
30.07.2008
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, 30 July 2008
EADS H1 2008 results
EADS H1 2008 results reflect continuing strong underlying performance
- Growth across all Divisions Revenues up 8 percent to 19.7 billion
- EBIT* grew to 1.16 billion despite A380 charge and weaker US dollar
- Free Cash Flow at healthy 1 billion
- Power8 programme over-performing
- Power8 Plus to deliver additional savings of 1 billion beyond 2010
- Full-year 2008 EBIT* guidance confirmed at 1.8 billion
EADS (stock exchange symbol: EAD) continued its robust underlying
performance in the first half of 2008 and achieved significant efficiency
improvements across all Divisions despite programme challenges the Group is
still facing. Within an uncertain macro-economic environment EADS
registered a remarkable order intake reflecting the quality of its
commercial and defence product portfolio. The Group confirms its full-year
2008 EBIT* guidance of 1.8 billion in spite of an A380 charge.
Airbus continued to ramp-up deliveries and handed over 245 aircraft
(H1 2007: 231 aircraft) to its customers. Just recently, Emirates became
the second operator of the A380, receiving its first aircraft from the
delivery centre in Hamburg. The Military Transport Aircraft Division rolled
out the first A400M from the final assembly line in Seville; first flight
is expected in autumn. Eurocopter registered a strong order intake bringing
its order book to a record high. Astrium made substantial progress in
completing the military satellite communication system Skynet 5. The
Defence & Security Division expanded its secure communications business and
forged ahead in its Unmanned Aerial Vehicle (UAV) activities.
Revenues increased by 8 percent to 19.7 billion (H1 2007: 18.4 billion)
reflecting growth across all five Divisions despite a negative US dollar
headwind. Higher Airbus deliveries (245 units, including four A380s,
compared to 231 aircraft in the same period of 2007), increased volumes at
Eurocopter, Astrium and Defence & Security and an A400M milestone
achievement demonstrate the strong commercial momentum in the
first half of 2008.
EADS EBIT* (pre goodwill and exceptionals) for the first half of 2008
reached 1.16 billion compared to 358 million in the first half of 2007,
when Airbus' EBIT* in particular was heavily burdened by Power8
restructuring provisions and A350 launch charges. The growth resulted from
improvements across all Divisions. At Airbus, strong operational
performance and achievement of Power8 cost savings were partly offset by a
715 million charge in the context of the A380 programme review announced
in May. Nevertheless, in the first six months of 2008, Group EBIT*
benefited from under-proportional R&D expenses but this benefit will
reverse in the second half of the year. In the first six months of 2008 a
negative US dollar impact of around 700 million led to loss-making
contract adjustments and put pressure on the Groups EBIT*. Deterioration
of hedge rates was compensated by temporary excess volume of matured
hedges.
In line with the Group's EBIT* development, EADS improved its Net Income to
403 million (H1 2007: 71 million), or earnings per share of 0.50
(earnings per share H1 2007: 0.09). To further address the weak US dollar
and to secure future profitability, EADS is taking decisive actions with
regard to its hedging activities. The Group started to complement its
hedging positions buying a significant amount of US dollar options.
Self-financed R&D expenses decreased slightly to 1,130 million (H1 2007:
1,266 million), but are expected to grow over the full year mainly in the
context of Airbus aircraft development programmes, especially for the
A350.
Free Cash Flow before customer financing increased significantly to
962 million (H1 2007: -29 million) driven by improved cash flow from
operations and reduced capital expenditure. The improvement in operating
cash flow mainly related to a stronger inflow of customer advance payments;
it additionally benefited from a much lower build-up of inventories.
Consequently, Free Cash Flow including customer financing improved to
1,043 million (H1 2007: -67 million) despite a cash-out for the
acquisition of PlantCML. An additional benefit came from a net contribution
from sell-down of customer financing assets compared to a cash-out in the
first half of 2007. In the first half of 2008, Cash Flow is significantly
less impacted by capital expenditure, settlement payments and restructuring
expenses than it will be over the rest of the year. At the end of June, the
Net Cash Position reached 8.1 billion (year-end 2007: 7.0 billion).
In the first six months of 2008, EADS order intake reached a remarkable
level of 51.2 billion compared to a record of 70.1 billion in the first
six months of 2007, when the order intake was strongly supported by the
extraordinary high order flow at the Paris air show. Up to the end of June
2008, the Groups order book remained at a record level of 354.2 billion
(year-end 2007: 339.5 billion). Orders for 247 aircraft received during
the recent Farnborough air show are not yet included in H1 order book. The
growth in order book was achieved despite a -17 billion revaluation due
to the weaker US dollar at the end of June. Orders within the commercial
aircraft business are based on list prices. The Group further expanded its
defence order book mainly thanks to its Military Transport Aircraft
Division; the defence order book closed the first half at 57.7 billion
(year-end 2007: 54.5 billion). At the end of June, EADS had 117,198
employees (year-end 2007: 116,493).
Group-wide efficiency measures are progressing well. The Power8
restructuring programme is ahead of schedule and achieved around
400 million EBIT* contribution in the first half of 2008. Airbus has made
considerable progress in overhead reductions and secured approximately 40
percent of the target for this module. The Group-wide selection of 28
preferred suppliers of engineering services out of an existing pool of
2,000 marked a significant step towards implementing a global sourcing
strategy. In terms of Smart Buying, Airbus is changing its supplier
contracts to life-cycle of programme contracts for selected aerostructures,
systems and equipment suppliers to limit non-recurring costs. General
procurement targets are already secured to 2010, driven by quick wins and
new sourcing initiatives as well as optimized logistics. The site
divestment strategy is maintained and the creation of the new French and
German aerostructures companies is progressing. These companies must comply
with the full original Power8 cost saving targets. The sale of Laupheim
(Germany) to Diehl/Thales is nearing completion, negotiations on divestment
in Filton (UK) are ongoing. Early July, EADS opened exclusive negotiations
with the Group DAHER for acquisition of a majority interest within EADS
Socata. Given the progress and prospects registered on the Power8 programme
so far, EADS and Airbus maintain the previously communicated Power8 targets
regarding EBIT* and Cash savings.
In addition to the successfully running Power8 programme EADS is launching
a Group-wide Power8 Plus programme to expand current initiatives after
2010. EADS will strengthen its focus on increasing its global footprint for
engineering and manufacturing. Power8 Plus targets a more internationalised
cost base (compared to a current one dominated by the Euro) and is intended
to deliver a further annual EBIT* benefit of 1 billion from across the
Group in 2011 to 2012. The measures will be presented to the European Works
Council in autumn.
Outlook
The EADS guidance is based on a closing spot rate at year-end 2008 of
1 = US$ 1.45.
EADS expects Airbus to capture above 850 aircraft orders in 2008.
EADS revenues are expected to exceed 40 billion in 2008, with about
470 aircraft deliveries for the full year.
EADS expects its 2008 EBIT* to reach 1.8 billion. The strong underlying
performance generated across all businesses in the first half of 2008
provides some upside potential. Nevertheless, EADS remains cautious
regarding the A400M programme. The Group expects that the results of the
first flight tests and further negotiations with customers and suppliers
will provide a sound basis for the finalisation of the cost-at-completion
exercise on the A400M programme.
The weakening of closing spot rate at year-end 2008 could have negative
impacts on earnings linked to the revaluation at a deteriorated US dollar
rate of some Airbus balance sheet items, including loss-making contract
provisions.
Before the impact of customer financing, EADS expects 2008 Free Cash Flow
at above 1 billion if the current trend is confirmed and while bearing in
mind that this is the most volatile item to predict.
* 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.
Contact:
Pierre Bayle +33 1 42 24 20 63
Edmund Reitter +49 89 607 34287
DGAP 30.07.2008
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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: EADS: H1 2008 results
| Source: EQS Group AG