26 Oct 16. Airbus Group SE (stock exchange symbol: AIR) reported nine month 2016 results which reflect the ongoing ramp-up and transition from current to new aircraft models (NEO).
“As expected the nine-month performance reflects the heavily back-loaded aircraft delivery schedule, ongoing production ramp-up and transition to new versions of our A320 and A330 aircraft,” said Tom Enders, Airbus Group Chief Executive Officer. “For the remaining months of the year we remain totally focused on deliveries to achieve our earnings and cash guidance. The commercial environment continues to be rather healthy, with a backlog of more than 6,700 aircraft supporting our production plans and reflecting the strength of the product portfolio. Further integration of the group, as recently decided, will simplify the company’s governance
and improve competitiveness.”
Group order intake(1) in the first nine months of 2016 was € 73.2 billion (9m 2015: € 111.9 billion), with the order book value totalling € 986 billion as of 30 September 2016 (year-end 2015:
€ 1,006 billion). Airbus received 380 net commercial aircraft orders (9m 2015: 815 net orders) with gross orders of 566 aircraft including 35 A350 XWBs and 14 A330neos. In the third quarter alone, 250 gross orders were booked for A320neo (new engine option) Family aircraft. Airbus Helicopters received 211 net orders (9m 2015: 181 net orders), including 47 H145s and 42 H135s. In August, an agreement was announced by Kuwait for 30 H225M Caracal helicopters. Defence and Space saw good order momentum, particularly in Space, while an agreement was signed with the
Netherlands and Luxembourg for two A330 MRTT aircraft.
Group revenues were stable at € 42.7 billion (9m 2015: € 43.0 billion). Revenues at Commercial Aircraft reflected higher A350 and A320 volumes but lower A330s and were supported by the
2 more favourable US dollar environment. In all, 462 commercial aircraft were delivered (9m 2015: 446 aircraft). Despite increased deliveries of 258 (9m 2015: 237 units), Helicopters’ revenues declined three percent, reflecting a higher proportion of light helicopters and lower commercial flight hours in services. Airbus Defence and Space’s revenues declined eight percent, reflecting the negative impact of the perimeter change from portfolio reshaping of
around € -450 million but were broadly stable on a comparable basis. Eleven A400M military transport aircraft were delivered in the nine month period. Group EBIT* before one-off(3) – 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 – amounted to € 2,415 million (9m 2015: € 2,804 million).
Commercial Aircraft’s EBIT* before one-off was € 1,838 million (9m 2015: € 2,226 million), driven by the lower A330 rate, delivery profile, transition pricing on A330 and A320, and higher
ramp-up costs, while research and development (R&D) costs decreased. On the A350 programme, 26 aircraft were delivered over the nine month period with 14 in the third quarter alone. Good progress was made over the summer in terms of risk management to
bring down the level of outstanding work in the final assembly line. Difficulties remain in the supply chain with work continuing on recurring cost convergence during the ramp-up. The company remains focused on these short-term challenges as it works towards achieving the A350 delivery target. A total of 24 A320neos were delivered from January to end September with the first CFM-engined aircraft delivered in the third quarter. The early teething problems with the Pratt & Whitney (P&W) engine are now largely over but P&W is facing some industrial ramp-up challenges which puts more pressure on the back-loading of the delivery profile. Firm
commitments have been received from both engine suppliers to meet the NEO schedule and the airframes are well on track for on-time delivery to customers.
In Helicopters, EBIT* before one-off was € 200 million (9m 2015: € 241 million), burdened by an unfavourable mix and lower commercial flight hours in services as well as the H225 accident in Norway and some campaign costs. However, the underlying profit at Helicopters continues to be supported by ongoing transformation measures and efforts to adapt to market challenges.
Defence and Space’s EBIT* before one-off was € 440 million (9m 2015: € 431 million) after the perimeter change from portfolio reshaping. On a comparable perimeter, EBIT* before one-off
(3) benefited from a better contract mix and risk reduction and restructuring efforts that have been implemented in the Division.
On the A400M, progress is being made on the industrial side in terms of capability development and programme governance although the overall programme situation remains challenging. The
fleet has now completed 10,000 in-service flight hours. Commercial negotiations with OCCAR and the Nations are yet to take place with regard to the revised delivery schedule and its implications. As of today, the outcome of these negotiations cannot be reliably estimated.
Group self-financed R&D expenses declined to € 2,015 million (9m 2015: € 2,287 million). Reported EBIT*(3) of € 2,363 million (9m 2015: € 2,946 million) included net one-offs totalling € -52 million. For the first nine months of 2016, a negative impact of € 723 million was recorded related to the dollar pre-delivery payment mismatch and balance sheet revaluation, while a total net capital gain of € 75 million was booked related to portfolio adjustments mainly at Defence and Space. The remaining one-offs were unchanged since the half-year 2016 results.
Net income(4) was € 1,811 million (9m 2015: € 1,900 million) with earnings per share of € 2.34 (9m 2015: € 2.42). The finance result was € -342 million (9m 2015: € -536 million). Free cash flow before mergers and acquisitions amounted to € -4,729 million (9m 2015:
€ -1,751 million), reflecting the investment in programmes for the fourth quarter deliveries and further ramp-up in 2017, in particular for A320 and A350. It also includes a significant cash burden for the A400M and around € 500 million of aircraft financing, which is mainly a reflection of the current suspension of Export Credit Agency financing. Airbus Group continues to work with the
ECAs on a process to resume financing, but given the progress so far, the timing and quantum are still uncertain.
Free cash flow of € -2,649 million (9m 2015: € -112 million) includes € 1.2 billion in proceeds from the sale of Dassault Aviation shares, € 750 million from the implementation of phase 2 of the Airbus
Safran Launchers JV and € 310 million from the sale of the Business Communication business. The net cash position on 30 September 2016 was € 5.6 billion (year-end 2015: € 10.0(5) billion) with a
gross cash position of € 16.9 billion (year-end 2015: € 19.1(5) billion).
Outlook
As the basis for its 2016 guidance, Airbus Group expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions.