Aero-Notes 18, November 2006

Number 18
November 2006
aero-notes
Letter to our Shareholders
SUMMARY
Dear Shareholders,
EADS AND AIRBUS FINALISE
A380 REVIEW
2
HIGHLIGHTS:
CUSTOMISED ELECTRICITY
FOR “À LA CARTE” SERVICES
4
Over the past few months,
EADS has been experiencing
heavy turbulence. The
announcement of further
delays in the emblematic A380
programme, and the financial impact of going off schedule,
have caused some to question the solidity of the Group and
have diverted attention away from its genuine strengths.
Sure, notable industrial management and corporate
governance flaws have been exposed. These had escaped
notice during the flush of success. Past over-confidence
carries heavy commercial and financial consequences. We
have been dealt a painful but salutary blow, and it is forcing
the Group to reassess its industrial model in terms of its
efficiency and value creation, for the long term. Conscious
of the need, compounded by the deteriorating dollar
exchange rate, we are committed to getting EADS back on
track and making it stronger than ever before.
EADS has what it takes to recover. First, EADS has truly
unique, modern and adequate products – and the
excellence of the A380 is not in dispute; it has loyal
customers that are entrusting it with repeat orders; it has a
remarkable, skilled and committed workforce; it has
supportive suppliers; and it has truly leading edge
technologies. Second, we know what's wrong, and we know
how to put it right. What we need is hard work, of a kind that
focuses on carefully selected issues. These will be resolved
by sticking to the tight schedule needed to surmount our
difficulties.
We have started with fundamental change along the lines of
the Power8 program. The first tangible result is the
clarification of the Group's structure. Louis Gallois is now
co-CEO of EADS and also CEO of Airbus, henceforth
wholly-owned by EADS. Simplification means faster
reactions and enhanced efficiency. The other divisions are
now headed up by Thomas Enders. In recent years these
divisions have been strengthening their competitiveness,
while Airbus generated earnings for the Group. They can
now pick up the earnings baton, and make a greater
contribution to EADS success.
We personally will supervise the implementation of this
transformation, which will be extended to the whole of the
Group. All our assets will come to bear, and help our Group
rise from present woes, stronger and even more worthy of
the trust you have placed in it.
THOMAS ENDERS
CEOs
2006 HALF YEAR RESULTS (H1)
6
AND
LOUIS GALLOIS
News
EADS and
Airbus finalise
a detailed joint EADS / Airbus
E Following
review of the A380 programme, Airbus
has revised the A380 delivery schedule for
the period 2007 to 2010. The first Airbus A380
series aircraft will be delivered in the second
half of 2007. In 2008 Airbus plans to deliver
13 aircraft. In 2009, 25 A380s shall leave
the final assembly line followed by 45 A380s
in 2010.
Compared to the June 13 plan deliveries will
be delayed for another year on average,
EADS announced after a meeting of its Board
of Directors on October 3, and specified
the resulting financial impact.
However, the A380 review also confirmed
that type certification for the A380 is likely
to be achieved by the end of the year.
While flight testing
is proceeding as planned,
the A380 is meeting or even
exceeding its performance
targets, and proves to be
a highly reliable and
comfortable aircraft.
PAGE 2 - NEWS - NOVEMBER 2006
A380 re
Comparison to original pre-June plan
The revised A380 delivery schedule results
in cumulative EBIT* shortfalls of € 4.8 billion
compared to the margin contribution of
its original baseline plan for the years 2006
to 2010 (at $ 1.30 per € 1.00):
• Thereof, close to € 2 billion cumulative EBIT*
previously expected between 2006 and 2010
will be postponed beyond 2010 as a result
of the delivery shifts to later years.
• In addition, cost overruns and late delivery
payments will result in irrecoverable expenses
and a corresponding € 2.8 billion reduction
in previously expected cumulative EBIT*
over the 2006 to 2010 period.
Finally, the build-up of inventory as well as
the impact on payments from A380 customers
will lead to a working capital increase of some
€ 1.5 billion.
Summing up all the above, EADS anticipates
the A380 programme will suffer
a cumulative free cash flow reduction of
€ 6.3 billion compared to previously expected
free cash flow for the period.
EBIT* contribution, 2006 guidance
From an Income Statement perspective,
the management estimates that the A380
series production will generate a cumulative
programme EBIT* loss of around € 2.8 billion
for the years 2006 to 2010, of which
approximately € 1.1 billion is anticipated
in 2006 and approximately € 0.7 billion
in 2007. The A380 programme shall deliver
a first positive EBIT* contribution in 2010.
The management estimates that the A380
programme contributions will be substantial
beyond 2010.
The above 2006 programme EBIT* loss
reflects an estimated € 0.6 billion of provisions
for A380 loss making contracts. The A380
charges, and charges potentially arising
from the outstanding decision on the A350
programme, as well as the amount and
phasing of non recurring charges of
the “Power8” programme, invalidate
the previously provided 2006 EBIT* guidance.
Until further notice, EADS will not issue
an updated 2006 outlook.
Possible contract terminations under the new
A380 timetable have not been taken into
account in the financial estimates.
eview
Power8
competitiveness programme
To restore its competitiveness, and to counter
the financial impact of these delays, Airbus
is launching the “Power8” programme which
is intended to generate sustainable annual cost
savings of at least € 2.0 billion from 2010
onwards. Furthermore, “Power8” aims
to speed up development processes and
to deliver around € 5.0 billion in cumulative
cash savings by 2010. The Board of Directors
fully supports the “Power8” programme.
Improvement and cost reduction programmes
will also be implemented in other parts of
the Group. Furthermore, EADS will continue
Group wide integration to reduce costs and
to achieve more efficient and more effective
management structures.
The Board of Directors decided to conduct
an independent assessment of individual
discharge of duties in the situation that led
to the A380 delays. This investigation will
extend to scrutinizing potential responsibilities
at the management level. The Company
reserves all its rights in the circumstances.
*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.
Appointment of Louis Gallois
as Airbus CEO.
EADS has announced the
resignation of Christian
Streiff as Airbus’ Chief
Executive Officer and
member of the EADS
Executive Committee
with immediate effect.
The EADS Board of Directors has
appointed EADS Co-CEO Louis Gallois as
Airbus CEO with immediate effect. Louis
Gallois will remain Co-CEO of EADS.
The non-Airbus divisions will report to
EADS Co-CEO Thomas Enders in the future.
The new management structure will allow,
on the one hand, a leaner, more efficient
corporate governance and, on the other
hand, additional cost savings within the
EADS group.
Military
Transport
Aircraft
F. Fernández Sáinz
The EADS Board of Directors has
appointed Fabrice Brégier as Airbus
Chief Operating Officer (COO) with
immediate effect. Fabrice Brégier
remains a member of the EADS Executive
Committee.
To further improve transparency within the
Group, the EADS Board has appointed
EADS CFO Hans Peter Ring as Airbus CFO
effective 1 January 2007. Hans Peter Ring
will remain CFO of EADS.
Lutz Bertling has been appointed to
succeed Fabrice Brégier as President and
CEO of Eurocopter and to join the EADS
Executive Committee with immediate
effect.
Chairman
M. Bischoff
Chairman
A. Lagardère
Chief Executive
Officer
T. Enders
Chief Executive
Officer
L. Gallois
Eurocopter
Space
L. Bertling
F. Auque
Defence
and Security
Systems
Airbus
L. Gallois
F. Brégier (COO)
S. Zoller
PAGE 3 - NEWS - NOVEMBER 2006
Highlights
Customis
A380 Programme: where are we?
• 15 planes assembled
• 5 planes in flight testing.
• 730 flights – 2,300 flying hours.
• Type certification from European certification
authorities (EASA) and American authorities (FAA)
in December 2006.
• Delivery of first plane to Singapore Airlines
in October 2007.
Final tests prior to certification
• On 4 September, the A380 took its first passengers
(see photo). 474 volunteer Airbus employees,
randomly chosen from the 15,000 applicants, took off
for the first of a series of four passenger flights,
the purpose being to test plane comfort and
ergonomics. On 13 November, the A380 began
its final series of technical trials under commercial
flight conditions, with a view to ensuring airport
compatibility. After leaving Toulouse, the plane will
make 4 flights to ten airports including Hong Kong,
Peking, Sydney and Vancouver.
PAGE 4 - HIGHLIGHTS - NOVEMBER 2006
FO
Why is the electrical installation of the A380 more complex
than in other planes? Commercial aircraft feature
increasingly high performance equipment. From reclining
seats to individual entertainment systems, cabin equipment
has fundamentally changed and is now a major selling
point to airline passengers.
Previously, planes were fitted with extensive hydraulic
systems, especially for seats. Today, seats are electronically
controlled. For example, twenty years ago, audio was piped
to passengers by tubes. But today, equipment is entirely
electronic. Electrical power is therefore the key to comfort
when flying.
Airlines flying the A380 aim to make the plane the flagship
of their fleet. They want to offer a hitherto unrivalled quality
of service. When fitting out the cabin, they want the latest,
most modern equipment, to give their customers a
bespoke service, surpassing all existing levels of quality.
■ On-board electricity: some figures
• More than 100,000 electrical lines interconnecting equipment.
• 530 km of wiring.
• Standard and optional electrical equipment requires the management
of more than 70,000 electrically powered technical solutions.
■ On-board electricity: innovations
• Widespread adoption of the new tools critical for system integration
(digital templates).
sed
• Technical innovations (standard and special in-cabin systems,
new components and materials).
• Reinforced quality and safety requirements.
• Level of sophistication hitherto unrivalled in quality for cabin fit-out,
particularly in telecommunications, video and telephone systems…
electricity
R “A LA CARTE” SERVICES
The search for excellence drives the increasing complexity
of equipment. Each customer airline needs to provide a
customised package of services. As a result, more than
70,000 electrical technical solutions have been developed
for the A380, resulting in huge numbers of combinations
at the electrical level, to meet customer requirements.
The A380 features 100,000 electrical connections, which
are so many wires interconnecting different items of
equipment. The electrical lines are bundled in harnesses.
However, all the information cannot be routed along the
same harness. This is because aircraft cabling and wiring
is governed by extremely precise rules for segregating
wires by purpose, so to ensure absolute data integrity.
Furthermore, given the growth in the number of wires and
in parallel the increased space they take up, there is less
and less room for routing the harnesses.
The electrical installation layout is also governed by the
cabin structure. Every time a system is upgraded, including
even an individual item of equipment, the electrical
connection has to keep pace. Each time a cable or wiring
route is modified, or there is a mechanical change in the
aircraft, there are spin-off consequences on the electrical
installations, with resulting, sometimes substantial,
modifications. This is one of the reasons of the delays
announced for the industrial roll-out of the A380. The
measures taken to overcome this situation are now
beginning to produce results. They will ensure that the
A380 cabin is on a par with the outstanding performance
of the aircraft itself.
PAGE 5 - HIGHLIGHTS - NOVEMBER 2006
E A D S – 2 0 0 6 H a l f Ye a r R e s u l t s ( H 1 )
EADS now owns
100 percent
of Airbus
EADS on 13 October acquired
from BAE Systems its 20 percent
stake in Airbus for € 2.75 billion.
This value was determined by
an independent expert during
the put option process which
was launched by BAE Systems
in June 2006. EADS paid in cash
from the existing resources
of the Group. EADS is therefore
now the sole owner of Airbus.
delivered solid results in the first
E EADS
half of 2006. Revenues increased
across all Divisions by 18 percent to € 19.0
billion (H1 2005: € 16.0 billion) and EBIT*
grew to € 1.6 billion, up six percent (H1 2005:
€ 1.5 billion).
The increase in EADS revenues was achieved
across all Divisions.
The Airbus contribution to the Group’s
increased revenues resulted mainly from higher
aircraft deliveries reaching record of 219
(H1 2005: 189).
Revenue growth in the Military Transport
Aircraft Division was supported by higher
revenue recognition in the A400M programme,
while Eurocopter benefited from strong
commercial momentum leading to a volume
increase. The combined revenues from EADS
defence businesses amounted to € 4.1 billion
(H1 2005: € 3.1 billion). As in previous years
top and bottom line contribution from the
defence, helicopter and space businesses is
much stronger in the second half of the year.
EBIT* increases compared to the same period
of 2005 came from positive volume effects
and ongoing EBIT* improvements in all
Divisions, despite the strong Dollar headwind
with hedges maturing at an average rate of
€ 1 = US$ 1.08 (H1 2005: € 1 = US$ 1.01),
EADS Sogerma Services charges, additional
costs related to the revised A380 delivery
schedule and increases in Research &
Development (R&D) expenses. The EBIT*
margin amounted to 8.6 percent.
In the first half of 2006, self-financed R&D
expenses amounted to € 1,139 million
(H1 2005: € 950 million). This increase was
mostly due to the development costs on the
A350 programme. The five percent rise in
EADS’ Net Income to € 1,043 million
3.3 %
11.3 %
Revenues (H1)
6.4 %
7.3 %
AIRBUS
MILITARY TRANSPORT AIRCRAFT
EUROCOPTER
6.2 %
SPACE
DEFENCE AND SECURITY SYSTEMS
OTHER ACTIVITIES
65.5 %
PAGE 6 - RESULTS - NOVEMBER 2006
News
EADS Group (Amounts in Euros)
Revenues
Thereof defence
EBITDA(1)
EBIT(2)
Research and Development costs
Net Income(3)
Earnings Per Share (EPS)(3), in Euros
Free Cash Flow (FCF)
Free Cash Flow before Customer Financing
Order Intake(4)
EADS Group (Amounts in Euros)
Order Book(4)
Thereof defence
Net Cash position
H1 2006
H1 2005
Change
18,980
4,127
2,405
1,632
1,139
1,043
1.31 €
319
– 216
14,153
16,020
3,051
2,240
1,540
950
992
1.25 €
1,581
1,477
25,424
+ 18%
+ 35%
+ 7%
+ 6%
+ 20%
+ 5%
+ 0.06 €
– 80%
–
– 44%
30 June 2006
31 Dec. 2005
Change
234,482
51,098
5,251
253,235
52,363
5,489
– 7%
– 2%
– 4%
1) Earnings before interest, taxes, depreciation, amortization and exceptionals.
2) Earnings before interest and taxes, pre-goodwill impairment and exceptionals.
3) EADS continues to use the term Net Income. It is identical with Profit for the period attributable to equity holders of the parent as defined
by IFRS Rules; Revised application of IAS 32 standards required changes regarding the accounting for the put option granted to BAE Systems
as a minority shareholder of Airbus (20 percent).
4) Contributions from commercial aircraft activities to EADS Order Intake and Order Book based on list prices.
(H1 2005: € 992 million), or € 1.31 per share
(H1 2005: € 1.25) reflects the Group EBIT*
increase being partly offset by finance costs.
In the first six months of 2006, EADS’ order
intake amounted to € 14.2 billion (H1 2005:
€ 25.4 billion).
Free Cash Flow including customer financing
stood at € 319 million (H1 2005: € 1,581
million).
At the end of June, EADS’ order book stood at
€ 234.5 billion* (year-end 2005: € 253.2
billion).
The reduction compared to the same period of
2005 is mainly due to reduced contribution
from pre-delivery payments and partly offset by
a positive effect from customer financing.
Consequently, Free Cash Flow before
customer financing amounted to € –216
million (H1 2005: € 1,477 million).
At the end of June 2006, the Net Cash position
stood at € 5.3 billion (year-end 2005: € 5.5
billion).
The order book decreased versus year-end
2005 mainly due to an impact of around
€ 12 billion from a less favourable €/US$
exchange rate. The Group’s defence order
book stood at € 51.1 billion as of 30 June
2006 (year-end 2005: € 52.4 billion).
In the first six months of 2006, EADS created
more than 2,000 new jobs.
*Contributions from commercial aircraft activities are based
on list prices.
EADS’ business development
strategy in the United States
was significantly advanced by the
U.S. Army’s decision to acquire
300-plus helicopters from EADS
North America, which is leading
an industrial team that includes
the key participation of its American
Eurocopter business unit and
Sikorsky.
Under terms of the contract,
EADS North America will provide
322 UH-145 Light Utility Helicopters
to the U.S. Army, with a total
programme life-cycle value
of over $3 billion.
“This very important win
demonstrates that EADS
can succeed in the U.S. defence
market when it has the right product,
the full support of EADS in Europe,
and the resources to develop
a competitive offer,” said Ralph
D. Crosby, Jr., EADS North America
Chairman & CEO, and a member
of the EADS Executive Committee.
“Our focus now is delivering on
our promise to the Army – which is
the world’s largest helicopter
operator – as well as pursuing other
competitive programmes, including
the KC-30 aerial refuelling tanker
for the U.S. Air Force and the C-295
military transport for the Army/Air
Force Joint Cargo Aircraft mission.”
The UH-145 selected by the
U.S. Army is a militarized version
of Eurocopter’s multi-role EC145
helicopter, and it will perform a
variety of missions in U.S. domestic
service, including medical
evacuation, passenger and logistics
transportation, as well as homeland
security operations.
EADS North America’s prime
contractor role for the UH-145
becomes a cornerstone of the
company’s U.S. market strategy,
which also is based on the creation
of industrial partnerships, as well as
merger/acquisition opportunities.
2006
REVENUES PROGRESS
(FIRST HALF-YEAR)
18,980 M€
2004 2005
E
BREAKTHROUGH ON THE
AMERICAN MILITARY MARKET
16,020 M€
14,567 M€
To read the full press release
and follow Group news go to
www.eads.com
PAGE 7 - RÉSULTS - NOVEMBER 2006
Shareholders
Capital structure
Your EADS shares
CAPITAL STRUCTURE
as of 16/10/2006 (as %)
Share price falls on delay announcements
30%*
22.5%
5.5%
1%
41%
■ DaimlerChrysler
STOCK PRICE EVOLUTION ON NOVEMBER 7th, 2006
■ SOGEADE
Lagardère and SOGEPA (French state holding Company)
■
On 10 September EADS confirmed it had received notification that the Russian stateowned Vneshtorgbank (VTB) had acquired a stake of 5.02% in EADS.
On 12 September, EADS share price rose 5.4% on rumours that Russia might increase
its stake still further.
In the second half of September, the EADS share price dropped after an initial
announcement of further delays in the A380 programme, speculation that Emirates
could cancel A380 orders.
The share price stabilised at a lower level before coming under further pressure.
On 3 October, EADS and Airbus published the findings of the A380 programme review
and announced a further 10-month delay in deliveries as well as the launch of Power8.
Soon afterwards Christian Streiff resigned as Airbus CEO. By 9 October, EADS shares
were down 11.0 % at € 20.16.
Investors were concerned about management instability and that A380 delays might rob
EADS of earnings growth for much of the current upturn in the aircraft market.
The impact of the delays on net cash were also a cause for concern.
Despite relatively negative news flow on credit rating downgrades and speculation on
increased government shareholdings, the EADS share price slightly rebounded and
stabilised at a lower level following news flow after the EADS investor forum in Hamburg,
which took place on 19 and 20 October and now fluctuates between € 20 and € 23.
* of which 7.5% will be deliverable at the maturity (from June 2007)
of Mandatory Exchangeable Bonds issued by Lagardère.
■ SEPI
(Spanish state holding Company)
■ Institutional, retail and employee ownership
+ Shares held out of the contractual partnership
French state.
■ Treasury Shares
(Shares without economic or voting rights).
EADS stock price (in €)
Base 100 dated 10 July 2000
220
38.5
200
35.0
180
31.5
160
28.0
140
24.5
120
21.0
100
17.5
80
14.0
60
10.5
40
7.0
20
3.5
0
0
2000
2001
2002
2003
2004
2005
2006
EADS
Profile
BOEING (stock price converted in euro using daily dollar spot closing)
CAC 40
ISIN Code
NL0000235190
Shareholder diary
Number of issued shares
as of May 15th, 2006
Offer price
on July 10th, 2000
815 349 555
€ 19 for institutional investors
€ 18 for retail investors
High in 2006
on Paris Stock Market
Low in 2006
on Paris Stock Market
€ 35.42 on March 27th
€ 16.75 on June 14th
Earnings per share (EPS) 2005
€ 2.11
Dividend per share 2005,
paid on June 1st, 2006
€ 0.65
• November 13th, 2006:
Shareholders’ meeting in Nice
Shareholder
Information
www.eads.com
ir@eads.net
• November 17th-18th, 2006:
Actionaria meeting in Paris
Freefone
• November 27th, 2006:
Shareholders’ meeting in Rouen
France:
Germany:
Spain:
• November 29th, 2006:
Shareholders’ meeting in Brussels
0 800 01 2001
00 800 00 02 2002
00 800 00 02 2002
Publication director:
Pierre de Bausset
Editorial team: Charles-Etienne
Lebatard, Karima Bouaici
Photos: EADS
News release
EADS nine month results
EADS results for the first nine months of the year show a record level
for deliveries and future challenges.
results for the first nine months
E ofEADS’
2006 reflect high delivery levels
throughout the Group as well as anticipation
of the challenges ahead. From January
to September 2006, EADS increased
its revenues across all Divisions by 17 percent
to € 27.5 billion (9m 2005: € 23.4 billion).
The Group achieved an EBIT* (pre-goodwill
and exceptionals) of € 1.4 billion (9m 2005:
2.1 billion), a reduction attributable to the A380
delays and the US Dollar devaluation against
the Euro.
“EADS financials remain sound based on good
performance of the Airbus delivery
programmes and the helicopter, defence and
space businesses. Nevertheless, the struggle
to reverse the A380 problems imposes
a severe burden on our financial performance,”
said EADS CEOs Thomas Enders and
Louis Gallois. “This together with the Dollar
devaluation requires drastic measures
to remain competitive. Therefore the ‘Power8’
programme in Airbus and structural
streamlining of the Group has top priority.”
The rescheduling of the A380 delivery plan
in early October overshadowed the progress
in the A380 type certification process as well as
Airbus' record nine month deliveries
of 320 aircraft.
The Airbus Division revenues grew by
16 percent to € 18,570 million (9m 2005:
€ 16,033 million) mainly driven by ramped-up
aircraft deliveries of 320 in the first nine months
of 2006 (271 in the same period of the
previous year). EBIT* contracted by 38 percent
to € 1,141 million (9m 2005: € 1,854 million).
A positive volume effect and Route06 savings
were more than offset by charges associated
with the A380 delay (€ – 1.0 billion),
a significant dollar impact and higher R&D
expenses. Airbus received 226 gross orders
during the first three quarters of 2006.
At the end of September 2006, the Airbus
order book amounted to € 183.8 billion based
on list prices, representing a total of 2,061
aircraft (year-end 2005: 2,177 aircraft).
Eurocopter performed well in the rapidly
growing helicopter market. Revenues strongly
improved by 17 percent to € 2,364 million
(9m 2005: € 2,021 million) driven by higher
helicopter deliveries (257 compared to 210
in the same period of the previous year).
EBIT* grew to € 125 million (9m 2005:
€ 105 million). This 19 percent improvement
was achieved by a positive volume effect
in series helicopter production and despite
a detrimental US Dollar impact.
The Military Transport Aircraft Division
accounted revenues of € 1,699 million
(9m 2005: € 504 million). From January
to September 2006 it recorded a strengthened
EBIT* of € 22 million compared to € 1 million
in the same period of 2005, reflecting higher
revenue recognition in the A400M programme.
Production of the A400M is underway and
the Cockpit Mock-up milestone was reached
*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.
in accordance with the contractual schedule.
Nevertheless, EADS is conducting an internal
technical assessment to validate the current
programme status and ensure transparency
to the customer.
The Space Division recorded 17 percent
higher revenues of € 1,960 million (9m 2005:
€ 1,670 million). Main drivers were the rampup of Ariane 5 production and progress
in military satellite communications such as
Skynet 5 or SatcomBw. EBIT* surged to
€ 45 million in the first nine months compared
to € 10 million in the same period of 2005.
The profitability improvement of the Defence &
Security Systems Division continues.
Revenues increased by 4 percent to € 3,553
million (9m 2005: € 3,419 million). EBIT* for the
first nine months 2006 reached € 148 million
(9m 2005: € 10 million).
During the first nine months of 2006, orders
placed with EADS amounted to € 25.7 billion.
Eurocopter (87 percent increase
in orders) and the Space division (130 percent
increase in orders) have benefited from a major
trade expansion.
At the end of September, EADS orders
amounted to € 236.5 billion (end of 2005:
€ 253.2 billion).
News release
Outlook 2006
EADS
Nine Month Results 2006
(Amounts in Euro)
EADS GROUP (amounts in millions)
Revenues
Thereof defence
EBITDA(1)
EBIT(2)
Research and Development costs
Net Income(3)
Earnings Per Share (EPS)(3), en euros
Order Intake(4)
EADS GROUP
Order Book , in millions
Thereof defence, in millions
Employees
(4)
01-09 2006
01-09 2005
Change
27,469
5,921
2,531
1,393
1,691
848
€ 1.06
25,688
23,446
4,877
3,370
2,099
1,431
1,271
€ 1.60
38,802
+ 17%
+ 21%
– 25%
– 34%
+ 18%
– 33%
– € 0.54
– 34%
30 Sept. 2006
31 Dec. 2005
Change
236,524
52,626
116,146
253,235
52,363
113,210
– 7%
+ 1%
+ 3%
Based on the expectation of
430 Airbus aircraft deliveries in 2006
and strong contributions from
its helicopters, defence and space
businesses EADS is set to achieve
revenues of well above € 37 billion
for the full year as announced on
27 July 2006. EADS withdrew
its previously provided 2006 EBIT*
and Free Cash Flow guidance
on 3 October 2006. As already
announced, EADS will not issue
an updated 2006 outlook until
further notice.
Nevertheless, due to the seasonality
of all EADS businesses except from
Airbus, the EBIT* of Military Transport
Aircraft, Eurocopter, Space and
Defence & Security Systems
Divisions is traditionally stronger
in the fourth quarter than in
the previous quarters of the year.
1) Earnings before interest, taxes, depreciation, amortization and exceptionals
2) Earnings before interest and taxes, pre-goodwill impairment and exceptionals
3) EADS continues to use the term Net Income. It is identical with Profit for the period attributable to equity holders of the parent as defined by
IFRS Rules; Revised application of IAS 32 standards required changes regarding the accounting for the put option formerly granted to BAE
Systems as a minority shareholder of Airbus (20 percent). In the first nine months of 2006, these changes contributed € 133 million to Net
Income (9m 2005: € 246 million) or € 0.17 to earnings per share (9m 2005: € 0.31). These changes also resulted in the recognition of the put
option in the balance sheet as a liability for puttable instruments (€ 2.75 billion; year-end 2005: € 3.5 billion). The liability replaces the minority
interest for BAE Systems’ 20 percent Airbus stake in EADS’ balance sheet. The acquisition of BAE Systems’ stake in Airbus was closed in
October 2006. The impact will therefore be accounted for in the fourth quarter 2006.
4) Contributions from commercial aircraft activities to EADS Order Intake and Order Book based on list prices
To read the full press release
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EADS
Third Quarter results (Q3) 2006
www.eads.com
(Amounts in Euro)
BY division
(Amounts in millions of Euro)
Airbus
Military Transport Aircraft
Eurocopter
Space
Defence & Security Systems
Headquarters Consolidation
Other Businesses(2)
Total
01-09 2006
Revenues
01-09 2005
Change
18,570
1,699
2,364
1,960
3,553
– 1,599
922
27,469
16,033
504
2,021
1,670
3,419
– 984
783
23,446
+ 16 %
+ 237 %
+ 17 %
+ 17 %
+4%
–
+ 18 %
+ 17 %
1) Earnings before interest and taxes, pre-goodwill impairment and exceptionals
2) ATR, EADS EFW, EADS Socata and EADS Sogerma Services are allocated to Other Businesses which is not a stand-alone EADS Division
01-09 2006
EBIT(1)
01-09 2005
Change
1,141
22
125
45
148
99
– 187
1,393
1,854
1
105
10
10
175
– 56
2,099
– 38 %
NS
+ 19 %
+ 350 %
NS
–
–
– 34 %