· Solid commercial aircraft environment
· 9m financials mainly reflect A320neo ramp-up and A350 progress
· Revenues € 46.2 billion, +14% YoY; EBIT Adjusted € 4.1 billion, +51% YoY
· EBIT (reported) € 3.4 billion; EPS (reported) € 2.81
· 2019 guidance updated for delivery outlook of around 860 commercial aircraft: FCF before M&A and Customer Financing now approximately € 3 billion, EBIT Adjusted guidance maintained
Amsterdam, 30 October 2019 – Airbus SE (stock exchange symbol: AIR) reported Nine-Month (9m) 2019 consolidated financial results and provided full-year guidance.
“Our nine-month results are mainly driven by the performance in commercial aircraft, reflecting both the A320neo ramp-up and progress on the A350,” said Airbus Chief Executive Officer Guillaume Faury. “We are focused on the A320neo ramp-up and improving the industrial flow while managing the higher level of complexity on the A321 ACF in particular. Our nine-month delivery numbers and the updated delivery outlook for the year reflect the underlying actions to secure a more efficient delivery flow in the next years as we progress to rate 63 per month for the A320 Family in 2021. The full-year free cash flow guidance has been adjusted to reflect the revised delivery outlook while the EBIT Adjusted target is maintained. We are focused on meeting our customer commitments and preparing the production system for the future.”
Gross commercial aircraft orders totalled 303 (9m 2018: 311 aircraft), including 20 A330neos and 22 A350 XWBs in the third quarter alone, with net orders of 127 aircraft (9m 2018: 256 aircraft). The order book stood at 7,133 commercial aircraft as of 30 September 2019. Net helicopter orders of 173 units (9m 2018: 230 units) included 12 H135s in the third quarter. Airbus Defence and Space’s order intake by value totalled € 6.1 billion, with third quarter bookings supported by key contract wins in Space Systems.
Consolidated revenues increased to € 46.2 billion (9m 2018: € 40.4 billion), mainly driven by higher deliveries, a favourable mix and foreign exchange rate development. A total of 571 commercial aircraft were delivered (9m 2018: 503 aircraft), comprising 33 A220s, 422 A320 Family, 34 A330s, 77 A350s and 5 A380s. Airbus Helicopters delivered 209 units (9m 2018: 218 units) with its stable revenues supported by growth in services and reduced by programme phasing. In September, the 1,000th Super Puma helicopter was delivered. Higher revenues at Airbus Defence and Space were mainly driven by Military Aircraft activities.
Consolidated EBIT Adjusted – an alternative performance measure and key indicator capturing the underlying business margin by excluding material charges or profits caused by movements in provisions related to programmes, restructurings or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – increased to € 4,133 million (9m 2018: € 2,738 million), mainly reflecting the commercial aircraft performance at Airbus.
Airbus’ EBIT Adjusted increased sharply to € 3,833 million (9m 2018: € 2,340 million), largely driven by the A320 ramp-up and NEO premium, progress on the A350 financial performance and foreign exchange improvement which already materialised in H1 2019.
On the A320 programme, NEO aircraft represented 338 out of the total 422 deliveries. The production ramp-up continued for the Airbus Cabin Flex (ACF) version of the A321, which remains challenging. The ACF programme will further ramp up in Q4 2019 with efforts continuing throughout 2020 to improve the industrial maturity of the programme. Airbus also continues to study different options to increase the share of the A321 in current A320 Family production capacity. The ramp-up of the A330neo continued and represented 26 of the total 34 A330 deliveries over the nine-month period. Airbus continued to make good progress on A350 recurring cost convergence with the programme on track to reach the breakeven target for the year.
Airbus Helicopters’ EBIT Adjusted was stable at € 205 million (9m 2018: € 202 million), reflecting an increased contribution from services which was reduced by a less favourable delivery mix.
EBIT Adjusted at Airbus Defence and Space totalled € 355 million (9m 2018: € 409 million), mainly reflecting efforts to support ongoing and future campaigns. The Division’s focus is on performance improvement across its businesses.
Ten A400M military transport aircraft were delivered, bringing the in-service fleet to 84 as of 30 September 2019. During the third quarter several key milestones were achieved towards the aircraft’s full capability, including the successful deployment of 58 paratroopers through a single side door and 80 simultaneously from both side doors as well as in-flight refuelling contacts with an H225M helicopter. While the A400M cash consumption is reducing, it is not at the pace being targeted. Airbus will continue with development activities towards achieving the revised capability roadmap. Retrofit activities are progressing in line with the customer agreed plan. Challenges remain, particularly on exports.
Consolidated self-financed R&D expenses totalled € 2,150 million (9m 2018: € 2,103 million).
Consolidated EBIT (reported) increased to € 3,431 million (9m 2018: € 2,683 million), including Adjustments totalling a net € -702 million. These Adjustments comprised:
· A negative € -253 million related to the dollar pre-delivery payment mismatch and balance sheet revaluation;
· A negative € -221 million related to the suspension of defence export licences to Saudi Arabia by the German government, now prolonged to March 2020, of which € -13 million were booked in Q3 2019;
· A negative € -158 million related to A380 programme cost, of which € -22 million were booked in Q3 2019, as part of Airbus’ continuous assessment of asset recoverability and the quarterly review of onerous contract provision assumptions;
· A total of € -70 million of other costs.
Consolidated reported earnings per share of € 2.81 (9m 2018: € 1.88) included a negative impact from the financial result, affected by the recognition of a loss on foreign exchange hedges as a result of the defence export licence suspension already booked as of Q2 2019. The financial result was € -233 million (9m 2018: € -413 million). The effective tax rate also reflected charges related to the defence export licence suspension, as well as the reassessment of tax assets and liabilities. Consolidated net income(1) was € 2,186 million (9m 2018: € 1,453 million).
Consolidated free cash flow before M&A and customer financing of € -4,937 million (9m 2018: € -4,169 million) mainly reflected the working capital build to support future deliveries, including advanced stage aircraft close to delivery. Consolidated free cash flow was € -5,127 million (9m 2018: € -3,928 million).
The consolidated net cash position was € 5.6 billion on 30 September 2019 (year-end 2018: € 13.3 billion) after the 2018 dividend payment of € 1.3 billion in the second quarter. The gross cash position on 30 September was € 17.8 billion (year-end 2018: € 22.2 billion).
In response to developments in the WTO dispute, the United States Trade Representative (USTR) decided to impose tariffs on Airbus commercial aircraft imported from the EU into the US from 18 October 2019. The tariffs, as announced, do not include components delivered to Mobile, US, from Europe. Airbus is working with its US customers to manage the consequences of these tariffs. The potential decision of the EU to impose tariffs on US products should come at a later stage. Airbus continues to support an outcome through a negotiated solution(2).
Outlook
As the basis for its 2019 guidance, the Company expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions.
The 2019 earnings and Free Cash Flow guidance is before M&A.
· Airbus now targets around 860 commercial aircraft deliveries in 2019, which reflects the updated delivery schedule.
· On that basis:
Airbus maintains its expected increase in EBIT Adjusted of approximately +15% compared to 2018.
Airbus now expects FCF before M&A and Customer Financing of approximately € 3 billion.