Ad-hoc: Continued Growth: EADS Reports Strong Full Year Results 2012
Amsterdam, 27 February 2013
• Revenues increase 15 percent to € 56.5 billion
• EBIT* before one-off up 68 percent to € 3.0 billion
• Net Income rises 19 percent to € 1.2 billion
• Free Cash Flow before acquisitions € 1.4 billion
• Proposed dividend increases to € 0.60 a share
• EADS targets € 3.5 billion EBIT* before one-off in 2013
EADS (stock exchange symbol: EAD) achieved strong revenue and underlying profit growth for the full year 2012. Despite a difficult macro-economic environment, EADS saw continued momentum in its commercial activities while defence revenues were broadly stable.
The order intake(5) totalled € 102.5 billion in 2012 while EADS’ order book(5) increased in value to € 566.5 billion at the end of the year. Revenues amounted to € 56.5 billion. The EBIT* before one-off of around € 3.0 billion reflected the strong operational performance at Airbus Commercial with positive contributions from Eurocopter and Astrium. The reported EBIT* increased to € 2.2 billion. The Net Cash position at the end of the year was € 12.3 billion.
“EADS achieved double-digit revenue and profit growth during 2012 while the order backlog increased further,” said EADS CEO Tom Enders. “A strong focus on deliveries helped to significantly improve cash generation during the fourth quarter. Going-forward, the focus on bottom line growth remains our priority number one as a management team. And there’s still some way to go to meet our profitability targets. If anything, the new governance, the new shareholder structure and the new Board as of end March will further energize the company and its employees on their successful international growth path.”
For the full year 2012, EADS’ revenues increased by 15 percent to € 56.5 billion (FY 2011: € 49.1 billion). This strong performance was driven mainly by higher volume and more favourable U.S. dollar rates at Airbus Commercial as well as solid increases at Eurocopter and Astrium. Revenues at Eurocopter and Astrium were boosted by the services businesses, including Vector Aerospace and Vizada. The companies acquired in 2011 contributed around € 1.5 billion to the 2012 revenues. Despite the overall defence environment, defence revenues were flat compared to 2011.
Physical deliveries remained strong with a record 588 aircraft for Airbus Commercial, 29 aircraft for Airbus Military, 475 helicopters at Eurocopter and the 53rd consecutive successful Ariane 5 launch.
EBIT* before one-off (adjusted EBIT*) – 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 sharply to € 3.0 billion (FY 2011: € 1.8 billion) for EADS and to around € 1.8 billion for Airbus (FY 2011: around € 0.5 billion).
The Group performance was driven by the strong underlying performance at Airbus Commercial while Eurocopter and Astrium also delivered absolute increases to the EBIT* before one-off.
EADS’ reported EBIT* increased to € 2,186 million (FY 2011: € 1,696 million) with one-off charges totalling € 820 million booked during the year.
Of these total one-off charges, € 522 million were booked at Airbus during 2012, including the anticipated € 251 million on the A380 related to the wing rib feet repair. The A350 XWB charge of € 124 million to reflect the latest programme update is unchanged since H1 2012. Good progress is being made on the A350 XWB programme but it remains challenging and there is no room left in the schedule. Also included are the € 76 million charges related to the Hawker Beechcraft Programme closure booked in the third quarter and a € 71 million charge for the foreign exchange impact on pre-delivery payments mismatch and balance sheet revaluation. At Eurocopter, the on-going renegotiation of certain contracts for governmental customers resulted in a € 100 million charge in the fourth quarter. At Cassidian, a total of € 198 million of charges were booked in the final quarter to reflect restructuring costs in line with the business transformation (€ 98 million) and a charge related to portfolio de-risking (€ 100 million), in particular for the secure systems and solutions business.
Net Income increased by 19 percent to € 1,228 million (FY 2011: € 1,033 million), or earnings per share of € 1.50 (earnings per share FY 2011: € 1.27). The Net Income* before one-off(4) increased to € 1,838 million (FY 2011: € 1,132 million). These increases reflect the improvement in the underlying operating performance.
The finance result amounted to € -453 million (FY 2011: € -220 million). The 2012 interest result of € -285 million (FY 2011: € 13 million) deteriorated partly due to lower interest income as a function of the high quality of investments. In addition, the 2011 interest result included a positive one-time release of
€ 120 million due to the termination of the A340 programme. The other financial result amounts to € -168 million (FY 2011: € -233 million), reflecting an improved impact from the foreign exchange revaluation compared to 2011. This line also includes the unwinding of discounted provisions.
Based on Earnings per Share (EPS) of € 1.50, the EADS Board of Directors proposes payment on 5 June 2013 of a dividend of € 0.60 per share to the Annual General Meeting of shareholders (FY 2011: € 0.45 per share). The record date should be 4 June 2013.
“This proposed dividend increase reflects the progress the Group made during 2012,” said Harald Wilhelm, CFO of EADS. “We are focused on delivering value to our shareholders.”
Self-financed Research & Development (R&D) expenses remained broadly stable at € 3,142 million (FY 2011: € 3,152 million), due to IAS38 capitalisation of € 366 million on the A350 XWB. The focus continues on major development programmes across the portfolio, in particular the A350 XWB and at Eurocopter.
Free Cash Flow before acquisitions of € 1,449 million exceeded expectations. The traditional end of year seasonal payment pattern has been very strong. It resulted in a strong positive swing in fourth quarter working capital thanks to the high delivery performance and stream of advances and receipts from commercial and government customers. Gross cash flow from operations reflects the strong underlying performance during the year.
The level of capital expenditure was € 3.3 billion, reflecting the ramp up in development and series programmes as the company builds capacity for future volume driven top and bottom line growth. It also includes the capitalised R&D under IAS38. Despite the record level of commercial aircraft deliveries, EADS’ customer financing gross exposure was broadly stable compared to the 2011 level.
EADS’ Net Cash position increased to a solid € 12.3 billion (year-end 2011: € 11.7 billion) after a cash contribution of € 856 million to pension assets and the dividend payment of about € 370 million.
EADS’ order intake(5) amounted to € 102.5 billion (FY 2011: € 131.0 billion) and reflected continuing commercial momentum across the EADS portfolio. Airbus Military, Eurocopter, Astrium and Cassidian all recorded year-on-year increases in order intake while Airbus Commercial exceeded its order target, booking 914 gross orders for 2012. At the end of December 2012, the Group’s order book(5) had increased by 5 percent to € 566.5 billion (year-end 2011: € 541.0 billion). The defence order book decreased to € 49.6 billion (year-end 2011: € 52.8 billion).
At the end of December 2012, EADS had a total of 140,405 employees (year-end 2011: 133,115).
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 disruption due to the current sovereign debt crisis.
In 2013, gross commercial aircraft orders should be above the number of deliveries, in the range of 700 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 proposed share buyback.
Excluding the known wing rib feet A380 impact in 2013 of around € 85 million 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 and 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.
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.
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 – Full Year (FY) Results 2012
(Amounts in euro)
EADS – Fourth Quarter Results (Q4) 2012
(Amounts in euro)