European Aeronautic Defence and Space Company / Quarter Results
12.05.2009
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, 12 May 2009
EADS - Q1 2009 results
EADS' Q1 2009 results reflect strengths but challenges remain
- Order book of EUR 413 billion - allowing active management of
deliveries
- Solid Net Cash position of EUR 8.7 billion in line with
expectations(year-end 2008: EUR 9.2 billion)
- EBIT* before one-off: EUR 0.4 billion
- EBIT* of EUR 232 million, impacted mainly by foreign exchange effects
- Net Income of EUR 170 million
EADS' (stock exchange symbol: EAD) first quarter 2009 results demonstrate a
continuing solid underlying performance. The strong order book allows
active management of deliveries at the expected level although the slowdown
of the commercial business is reflected in the weak order intake. Based on
under-proportional quarterly deliveries than in the same period of the
previous year and less other favourable phasing effects, revenues stood at
EUR 8.5 billion, EBIT* before one-off at EUR 0.4 billion. First-quarter
EBIT* was mainly burdened by foreign exchange effects and an A400M
accounting charge. The Net Cash Position remains solid at EUR 8.7 billion
and provides a stable basis for the years to come. EADS is well positioned
to face the crisis, although there is limited visibility towards the end of
the year and beyond.
Louis Gallois, CEO of EADS said: 'Despite the economic challenges, EADS
remains robust. We continue to proactively monitor our order book and
deliveries and we are improving our efficiency. With regard to the A400M
programme, which is a big concern for us, we need to find common solutions
on the technical and the commercial frame of the contract to achieve a
balanced sharing of the risks with our customers. Nevertheless, even in
these tough times, we remain fully committed to investing in our business
with a view to the long term. Our successful integration efforts are
generating real synergy benefits that go beyond cost savings. The range of
skills available across the Group places us in a unique position to offer
outstanding solutions for our customers' future needs.'
EADS has adjusted its divisional structure. The former Military Transport
Aircraft Division is being fully integrated into Airbus and has become -
under the name of Airbus Military - the military pole of Airbus. This will
strengthen programme management and improve resource allocation. The new
organisation is effective as of 2009.
Revenues of the Group amounted to EUR 8.5 billion (Q1 2008: EUR 9.9
billion) reflecting under-proportional Airbus deliveries (116 aircraft
compared to 123 in Q1 2008), less other favourable phasing effects,
negative foreign exchange impacts and lower revenue recognition in the
A400M programme. However, revenues improved at Astrium (up 20 percent) and
Eurocopter (up 4 percent).
EADS' EBIT* for the first quarter of 2009 amounted to EUR 232 million
compared to EUR 769 million in the previous year. This decrease came mainly
from negative foreign exchange impacts and an A400M accounting charge.
Before these one-offs, EADS' EBIT* contracted to EUR 0.4 billion (Q1 2008:
EUR 0.7 billion), mainly impacted by price deterioration on Airbus
deliveries, less volume and an unfavourable product mix.
EADS achieved a Net Income of EUR 170 million (Q1 2008: EUR 285 million),
or earnings per share of EUR 0.21 (earnings per share Q1 2008: EUR 0.35).
Self-financed R&D expenses slightly increased to EUR 562 million (Q1 2008:
EUR 534 million). This reflects Airbus' and Eurocopter's continuing
aircraft development programmes.
Free Cash Flow before customer financing stood at EUR -600 million (Q1
2008: EUR 1,022 million). The change compared to the same period of the
previous year, in which the Free Cash Flow benefited from a strongly
favourable seasonal effect, reflects the decrease of gross cash flow from
operations representing the lower earnings of the quarter and the
deterioration of the working capital. This deterioration is mirroring a
build-up of inventories at Airbus due to the mismatch between the current
production rates and the under-proportional phasing of deliveries versus
the full-year forecast. Despite the currently unfavourable market
environment, EADS did not face any real need to support customers in the
first quarter on a net basis. Therefore, Free Cash Flow including customer
financing amounts to EUR -585 million (Q1 2008: EUR 1,079 million). The
Group's Net Cash position remained high at EUR 8.7 billion (year-end 2008:
EUR 9.2 billion) giving EADS a robust liquidity base in unpredictable
economic times.
The seasonality of EADS' defence and institutional businesses implies that
revenue, earnings and cash performance tend to be back-loaded.
Order intake amounted to EUR 9.3 billion (Q1 2008: EUR 39.3 billion),
clearly reflecting lower commercial aircraft orders at Airbus and
Eurocopter but supported by the order for 35 Ariane 5 worth more than EUR 4
billion and France's order for 22 NH90 helicopters booked in Q1 2009. At
the end of March 2009, EADS' order book remained at a record high, at EUR
412.6 billion (year-end 2008: EUR 400.2 billion), benefiting from a EUR 13
billion favourable
US dollar impact. 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 54.9 billion (year-end 2008: EUR 54.9 billion).
At the end of March 2009, EADS had 117,198 employees (year-end 2008:
118,349).
As for the A400M, the first aircraft is progressing towards first flight.
It is now undergoing systems testing, while the second aircraft is complete
and about to start systems testing. For the engine, tests are progressing
satisfactorily on the flying test bed with eight flights so far, totalling
more than 21 flight hours. Static test was completed for the landing gear,
while the aircraft's fatigue test is in progress.
The customer OCCAR recently announced that the seven launch nations have
agreed to a three-month moratorium period lasting until the end of
June 2009. This provides an opportunity for all partners of the programme
to agree on the way ahead for a certain number of unresolved issues.
Furthermore, it gives room to realign and rebase the contract with
conditions acceptable to all parties. During this period, EADS will
continue to work with its suppliers and partners to establish a robust
timetable including a date for the first flight.
Furthermore, this period opens the negotiation process during which
different sets of assumptions will be exchanged. EADS intends to reduce any
further potential loss, but all financial consequences of the delays will
only be known once the negotiations are finalised. Any estimate in the
meantime is inaccurate or incomplete.
From an accounting standpoint, substantial negative income statement
impacts may still have to be booked in future periods when costs become
estimable or triggering events lead to a return to the
estimate-at-completion method of accounting. Potential benefits from
current discussions with customers might reduce such impacts, but would
only be taken into account once agreed upon by OCCAR and the launch
nations.
Due to the continuing high level of uncertainty on the programme,
EADS retained the early stage accounting treatment of this programme.**
The EBIT* impact of EUR -120 million for the first quarter in Airbus does
not reflect a complete new estimate of the cost-at-completion. Once EADS
has more reliable estimates of over-costs, it will revert to the
cost-at-completion method.
Outlook
The first quarter of 2009 confirms the trends described 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 order book and the
overbooking are challenged by the deterioration of the macroeconomic and
traffic indicators. Therefore, EADS is continuously 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
it is becoming more challenging in the current market environment. Based on
a stable delivery assumption and 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 should be down in 2009 but
significantly positive supported by robust underlying performance. Compared
to 2008, EBIT* will be negatively impacted by increased Research &
Development (R&D) expenses, by significant hedging deterioration, price
deterioration, increasing customer financing and support activity costs,
partly offset by further Power8 cost savings. Concerning one-off impacts,
revised industrial plans to complete the A400M programme could lead to a
substantial charge in the first half of 2009, weighing on EBIT*. If and
when EADS has an accurate view of the costs in H1, the Group will revert to
the cost-at-completion methodology. Any potential positive outcome coming
from the negotiation with customers and suppliers will need to be
substantiated before being taken into account.
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. The recently announced cut in A380 deliveries will equally
challenge the Free Cash Flow through a build- up of inventory which will be
mitigated by production optimization and supply chain management. EADS
expects to support its 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
around EUR 1.5 billion of Free Cash Flow after customer financing in 2009,
excluding any potential negative impact of 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.
Contact:
Edmund Reitter +49 89 607 34510
Markus Wölfle +49 89 607 34287
DGAP 12.05.2009
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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: EADS - Q1 2009 results
| Source: EQS Group AG