Airbus Financial Results First Quarter 2018

Airbus Financial Results First Quarter 2018

Airbus SEreported First Quarter 2018 consolidated financial results and confirmed its guidance for the full year.

“The first quarter performance reflects the shortage of A320neo engines and back-loaded aircraft deliveries as we indicated in the full-year disclosure. This is clearly shown in the financials,” said Airbus Chief Executive Officer Tom Enders. “It’s a challenging situation for all but based on the confidence expressed by the engine makers and their ability to deliver on commitments, we can confirm our full-year outlook. This still leaves us with plenty to do this year to reach the target of around 800 commercial aircraft deliveries.”

A total of 45 net commercial aircraft orders were received (Q1 2017: six aircraft) with gross orders of 68 aircraft including 20 A380s for Emirates Airline. The backlog by units totalled 7,189 commercial aircraft as of 31 March, 2018. Net helicopter orders increased to 104 units (Q1 2017: 60 units), including 10 H160s and 51 additional Lakota UH-72As for the US Army to bring the total orders in the programme above 450 helicopters. Airbus Defence and Space’s order intake included an additional A330 MRTT following Belgium’s participation in the multinational European NATO tanker fleet. 

 

Consolidated revenues totalled € 10.1 billion (Q1 2017: € 11.4 billion(1)), mainly reflecting lower commercial aircraft and helicopter deliveries.  Airbus deliveries totalled 121 commercial aircraft (Q1 2017: 136 aircraft), comprising 95 A320 Family, 8 A330s, 17 A350 XWBs and one A380. Airbus Helicopters delivered 52 units (Q1 2017: 78 units) with its revenues also reflecting the deconsolidation of services business Vector Aerospace in late 2017. Revenues at Airbus Defence and Space were slightly lower, reflecting the perimeter change from the sale of Defence Electronics in February 2017.

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, restructuring or foreign exchange impacts as well as capital gains/losses from the disposal and acquisition of businesses – totalled € 14 million (Q1 2017: € -19 million(1)).

Airbus’ EBIT Adjusted of € -41 million (Q1 2017: € -103 million(1)) mainly reflected the back-loaded aircraft delivery phasing, compensated by A350 improvements in both unit cost and price.

On the A320neo programme, new engines with a knife edge seal fix have started to be received from supplier Pratt & Whitney and GTF-powered aircraft deliveries have resumed. Airbus is also working closely with the other A320neo engine supplier, CFM International, which is working to catch-up on the production delays it encountered. Given the significant demand for the A320neo and the robust backlog, Airbus has started a feasibility study with the supply chain to investigate higher production rates. Airbus and its engine manufacturers are committed to delivering in line with the full year overall delivery objective of around 800 commercial aircraft, which leaves a lot to do in the second half of 2018. On the A330 programme, the transition to the NEO version continues with the first delivery expected this summer. Based on the current programme assessment, Airbus has decided to reduce A330 deliveries to around 50 per year in 2019. The A350 programme continues to make good progress on the ramp-up to the targeted monthly rate of 10 aircraft by year-end. The focus remains on further recurring cost convergence. Deliveries in the first quarter included the first A350-1000 while the first flight of the A350-900 ULR (Ultra Long Range) version took place in April.

Airbus Helicopters’ EBIT Adjusted was stable at € -3 million (Q1 2017: € -6 million(1)),  supported by the Division’s transformation efforts compensating market softness.

Airbus Defence and Space’s EBIT Adjusted was broadly stable at € 112 million (Q1 2017: € 118 million(1)).

Four A400M aircraft were delivered in the first quarter. The A400M launch customer programme is being baselined to eight aircraft per year from 2020. The Company is focused on securing export orders, achieving military capabilities, the new delivery plan and retrofit of in-service aircraft as agreed with the Nations. Following the Declaration of Intent reached with customers in February 2018, finalising the contract amendment and delivering in line with commitments are key priorities for this year.

Consolidated self-financed R&D expenses totalled € 616 million (Q1 2017: € 548 million).

Consolidated EBIT (reported) was € 199 million (Q1 2017: € 575 million(1)) including Adjustments totalling a net positive € 185 million. These comprised:

  • A net capital gain of € 159 million from the divestment of Plant Holdings, Inc., which held the Airbus DS Communications Inc. business;
  • A positive impact of € 46 million from the dollar pre-delivery payment mismatch and balance sheet revaluation;
  • € 20 million of other costs including compliance and M&A costs.

Consolidated net income(2) totalled € 283 million (Q1 2017: € 409 million(1)) with earnings per share of € 0.37 (Q1 2017: € 0.53(1)) also including a positive impact mainly from the revaluation of certain equity investments. The finance result was € 39 million (Q1 2017: € -206 million).

Consolidated free cash flow before M&A and customer financing amounted to € -3,839 million (Q1 2017: € -1,269 million), reflecting the back-loaded delivery profile and continuing production ramp-up. Consolidated free cash flow of € -3,656 million (Q1 2017: € -1,116 million) included net proceeds of € 191 million from the sale of the Airbus DS Communications Inc. business.

Cash flow for aircraft financing was very limited in the quarter at € -7 million. Export Credit Agency cover resumed in the first quarter and Airbus anticipates ECA cover for a limited number of transactions in 2018. The appetite for commercial financing remains high.

The consolidated net cash position on 31 March 2018 was € 9.8 billion (year-end 2017: € 13.4 billion) with a gross cash position of € 20.9 billion (year-end 2017: € 24.6 billion).

Outlook

As the basis for its 2018 guidance, the Company expects the world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions.

The 2018 earnings and Free Cash Flow guidance is based on a constant perimeter, before M&A.

  • Airbus expects to deliver around 800 commercial aircraft, which depends on engine manufacturers meeting commitments.

Based on around 800 deliveries:

  • Compared to 2017 EBIT Adjusted of € 4.25 billion as reported, pre-IFRS 15, the Company expects, before M&A:

Ø  An increase in EBIT Adjusted of approximately 20 percent.

Ø  IFRS 15 is expected to further increase EBIT Adjusted by an estimated € 0.1bn.

Ø  Therefore, the Company expects to report EBIT Adjusted of approximately € 5.2 billion prepared under IFRS 15 in 2018.

  • 2017 Free Cash Flow before M&A and Customer Financing was € 2,949 million. Free Cash Flow is expected to be at a similar level as 2017, before M&A and Customer Financing.
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