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30.07.2010 07:00:00 - DGAP-Adhoc: European Aeronautic Defence and Space Company EADS N.V.: EADS Reports Half-Year 2010 Results

	 

European Aeronautic Defence and Space Company EADS N.V. / Half Year Results 

.. 

Dissemination of an Ad hoc announcement according to § 15 WpHG, transmitted by 
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The issuer is solely responsible for the content of this announcement. 
 

Ad-hoc release, 30 July 2010 

EADS Reports Half-Year 2010 Results 

- Order intake of EUR 30.8 billion signals commercial aircraft momentum 

- Airbus to increase Single Aisle production rate to 40 per month 

- Stable revenues of EUR 20.3 billion 

- EBIT* before one-off at EUR 0.6 billion 

- EBIT* of EUR 406 million 

- Net income: EUR 185 million 

- Net Cash at EUR 8.9 billion remains key asset 

EADS' (stock exchange symbol: EAD) macro-economic and commercial 
environment continues to improve while challenges remain, particularly in 
the institutional sector. Revenues stood at EUR 20.3 billion. The EBIT* 
before one-off of EUR 0.6 billion benefited from good performance in Airbus 
legacy programmes and other business activities. EADS' EBIT* amounted to 
EUR 406 million after exceptional foreign exchange effects. The order 
intake of EUR 30.8 billion mirrors the improved momentum in commercial 
aviation. EADS' order book of more than EUR 454 billion provides a solid 
platform for future deliveries. The Group's Net Cash position of EUR 8.9 
billion remains a key asset. 

'Berlin and Farnborough Air Show orders reflect an improvement in the 
commercial aviation market. I am particularly glad to see the return of 
aircraft lessors. However, the institutional outlook is more challenging as 
public budgets in our domestic markets are under tight review', said Louis 
Gallois, CEO of EADS. 'Our key priorities remain clear: improving 
efficiency on the A380 production, developing the A350 and finalising the 
A400M contract amendment with the Customer Nations. I want to add that we 
have submitted our bid for the U.S. Air Force tanker programme and that we 
will fight hard to win the competition again.' 

In the first six months, EADS' revenues remained stable at EUR 20.3 billion 

(H1 2009: EUR 20.2 billion). Deliveries at Airbus Commercial (250 units) 
and Eurocopter (249 helicopters) remained roughly stable at a high level. 
The percentage of completion methodology was resumed on the A400M 
programme. In the second quarter, based on the allocation of internal 
milestones, around 
EUR 300 million in revenues were booked on the programme. Customer Nations 
and EADS continue working towards a contract amendment. In the meantime, 
the A400M flight test programme is progressing better than expected; 
however, the development of the Flight Management System is on the critical 
path, with more challenges than expected. Risk mitigation actions are being 
undertaken. Management assumptions of March 2010 underpinning the A400M 
provision calculation remain valid. As previously indicated, reassessment 
of these assumptions could have a significant impact on future results. 

EBIT* before one-off (adjusted EBIT*) - an indicator capturing the 
underlying business margin by excluding non-recurring charges or profits 
caused by movements in provisions or foreign exchange impacts - stood at 
EUR 0.6 billion 
(H1 2009: EUR 1.3 billion) for EADS and around EUR 0.3 billion for Airbus. 
It benefited from good performance in Airbus legacy programmes and other 
business activities. As expected, the A380 continues to weigh significantly 
on the underlying performance. Compared to H1 2009, EBIT* before one off 
was weighed down by the deterioration of hedge rates and higher investment 
in Research & Development. 

EADS' reported EBIT* of EUR 406 million (H1 2009: EUR 888 million) was 
further weighed down mainly by exceptional negative foreign exchange 
impacts. EADS has further refined its natural hedging strategy in line with 
IFRS, impacting reported EBIT* and other financial result but with no 
impact on EBIT* before one-off and net income. Exchange rate impacts 
weighed on the H1 2010 reported EBIT* by around EUR 550 million compared to 
H1 2009. 

Net Income amounted to EUR 185 million (H1 2009: EUR 378 million), or 
earnings per share of EUR 0.23 (earnings per share H1 2009: EUR 0.47). The 
interest result reflects the decline in interest rates on the financial 
markets. The other financial result improved considerably by around EUR 270 
million year on year. This line includes the positive revaluation of the 
Group's U.S. dollar and GBP cash assets. 

Self-financed Research & Development (R&D) expenses grew to 
EUR 1,301 million (H1 2009: EUR 1,172 million), driven by increases in 
Airbus due to a ramp up in A350 XWB activity as well as a rise in product 
investment at Defence & Security and Eurocopter. 

Free Cash Flow before customer financing of EUR -470 million (H1 2009: 
EUR -948 million) reflects a lower deterioration in working capital but the 
decrease in EBIT* before one-off. Change in working capital amounted to EUR 
-815 million 
(H1 2009: EUR -1,898 million). The change in working capital reflects, as 
anticipated, an increase in inventories, mainly at Airbus although at a 
much lower level than in the first half year of 2009. H1 2009 included a 
ramp up on the A380 production but a low level of A380 deliveries as well 
as a mismatch between production and delivery rates on both single aisle 
and long range aircraft in the period. The inflow of advances linked to 
Airbus commercial activity is higher than one year ago, representing an 
increase in commercial aircraft orders. Some payment delays in the defence 
and institutional business were compensated by government receipts for 
development programmes. Customer financing needs for the first half reached 
around EUR 270 million. Free Cash Flow after customer financing amounted to 
EUR -737 million (H1 2009: EUR -1,169 million). 

EADS' Net Cash position of EUR 8.9 billion (year-end 2009: EUR 9.8 billion) 
continues to provide a solid foundation for the Group's operational needs 
as well as future growth. It reflects the Free Cash Flow consumption of the 
first half year as well as a EUR 300 million contribution to the pension 
fund assets. 

The order intake of EADS significantly increased to EUR 30.8 billion 
compared to one year ago (H1 2009: EUR 17.2 billion) due to higher 
commercial aircraft orders. This does not include orders booked at 
Farnborough Air Show. By the end of June 2010, EADS' order book stood at 
EUR 454.5 billion (year-end 2009: EUR 389.1 billion), reflecting increases 
at Airbus and Astrium. The Airbus Commercial order book benefited from a 
positive revaluation impact of around EUR 56 billion due to the closing 
spot rate of the U.S. dollar that has significantly strengthened since 
year-end. The defence order book amounted to EUR 56.6 billion (year-end 
2009: EUR 57.3 billion). 

The strengthening of the dollar, if sustained, will improve profitability 
beyond 2012. In the short term, EADS' net exposure is almost fully hedged. 
At the end of June 2010, the mark-to-market value of the Group's hedge 
portfolio at the closing spot rate is a negative EUR 4.2 billion net of 
tax, impacting equity. These negative effects on equity will reverse as 
current hedges expire and/or the dollar further weakens. During the second 
quarter of 2010, EADS invested in foreign exchange options as well as 
forward contracts. Options consume less hedging capacity while allowing for 
a potential upside from more favourable rates. 

In case of a drastic strengthening of the U.S. dollar against the euro, the 
size of the hedge portfolio and the volatility of the financial markets 
could limit the availability of long term hedging capacity using forward 
contracts and could weigh further on equity. 

At the end of June 2010, EADS' workforce consisted of 120,038 employees 
(year-end 2009: 119,506). 

Outlook 

EADS' guidance is based on an assumption of EUR1 = $1.35 for the H2 average 
and December closing spot rates. 

The Group is increasing its guidance for orders, revenues, underlying 
profitability and free cash-flow. 

Given the recent commercial success at Farnborough and the number of 
on-going campaigns, Airbus has increased its full year target for gross 
orders to above 400. Single aisle production rates will go up to 36 a month 
at the end of this year, to 38 in Q3 2011 and to 40 a month in Q1 2012. 

On the other hand, the civil helicopter market and its related order stream 
are expected to be sluggish in H2 2010. At this stage, no significant 
impact is expected in 2010 from the pressure on institutional and defence 
budgets. 

Airbus deliveries should be around 500 aircraft for the full year 2010. 
Eurocopter deliveries will be slightly below the last year. 

Using these exchange rates and delivery assumptions, EADS revenues should 
increase to more than EUR 44 billion. 

Thanks to a higher number of expected deliveries and an upside to the 
group's underlying profitability, EADS EBIT* before one-off should reach 
around 
EUR 1.2 billion in 2010. At Airbus, H2 EBIT* before one-off will be lower 
than in H1. Compared to H1, the positive impact of higher volumes and 
better pricing will be more than offset by higher R&D and the deterioration 
of hedge rates compared to the first half of the year. 

Going forward, the EBIT* performance of EADS will be dependent on the 
Group's ability to execute on the A400M, A380 and A350 XWB programmes, in 
line with the commitments made to its customers. At EUR1 = $1.35, EADS 
maintains its EBIT* guidance of around EUR 1 billion despite the negative 
exceptional impacts from foreign exchange accrued in H1. 

EADS is also improving its free cash flow guidance. Provided a sustainable 
year-end cash inflow of institutional and government business and subject 
to pre-delivery payment advances for the A400M programme, the Free Cash 
Flow before customer financing should be break even. Free cash-flow after 
customer financing should be negative due to customer financing 
cash-outflows of around EUR 600 million. 

	Name	WKN	Börse	Kurs	Datum/Zeit	Diff.	Diff. %	Geld	Brief	Erster	Schluss
	EADS	938914	XETRA	18,33	02.09.10 17:35:49	+0,46	+2,57%	0,00	0,00	17,76	17,87
	EUROPEAN AERONAUTIC DEFENCE	EADSY	NASDAQ	23,45	02.09.10 19:35:58	+0,73	+3,21%	23,45	23,55	23,26	22,72