Airbus SE (stock exchange symbol: AIR) reported Full-Year (FY) 2019 consolidated financial results and provided guidance for 2020.
“We achieved a great deal in 2019. We delivered a strong underlying financial performance driven mainly by our commercial aircraft deliveries,” said Airbus Chief Executive Officer Guillaume Faury. “The reported earnings also reflect the final agreements with the authorities resolving the compliance investigations and a charge related to revised export assumptions for the A400M. The level of confidence in our ability to continue to deliver sustainable growth going forward has led to a dividend proposal of € 1.80 per share. Our focus in 2020 will be on reinforcing our company culture, improving operationally, and adjusting our cost structure to strengthen the financial performance and prepare for the future.”
Net commercial aircraft orders increased to 768 aircraft (2018: 747 aircraft), including 32 A350 XWBs, 89 A330s and 63 A220s. At the end of 2019, the order backlog reached 7,482 commercial aircraft. Airbus Helicopters achieved a book-to-bill ratio by value above 1 in a difficult market, recording 310 net orders in the year (2018: 381 units). This included 25 helicopters from the Super Puma family, 23 NH90s and 10 H160s. Airbus Defence and Space’s order intake by value of € 8.5 billion was supported by A400M services contracts and key contract wins in Space Systems.
Consolidated order intake in 2019 increased to € 81.2 billion (2018: € 55.5 billion) with the consolidated order book valued at € 471 billion on 31 December 2019 (end December 2018:
€ 460 billion).
Consolidated revenues increased to € 70.5 billion (2018: € 63.7 billion), mainly driven by the higher commercial aircraft deliveries and a favourable mix at Airbus, and to a lesser extent the favourable exchange rate development. A record 863 commercial aircraft were delivered (2018: 800 aircraft), comprising 48 A220s, 642 A320 Family, 53 A330s, 112 A350s and 8 A380s. Airbus Helicopters recorded stable revenues supported by growth in services, which offset lower deliveries of 332 rotorcraft (2018: 356 units). Revenues at Airbus Defence and Space were broadly stable compared to the previous year.
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 € 6,946 million (2018: € 5,834 million), mainly reflecting the operational performance at Airbus, partially offset by Airbus Defence and Space’s performance and additional ramp-up costs.
Airbus’ EBIT Adjusted increased by 32% to € 6,358 million (2018: € 4,808 million), largely driven by the A320 ramp-up and NEO premium, together with good progress on the A350.
On the A320 programme, NEO aircraft deliveries rose by 43% year-on-year to 551 aircraft. The ramp-up continued for the Airbus Cabin Flex (ACF) version of the A321 with almost 100 more deliveries than in 2018. The Airbus teams are focused on securing the ongoing ACF ramp-up and improving the industrial flow. Airbus is discussing further ramp-up potential for the A320 programme beyond rate 63 per month with the supply chain, and already sees a clear path to further increase the monthly production rate by 1 or 2 for each of the 2 years after 2021. The breakeven target for the A350 was achieved in 2019. Given overall customer demand for widebody aircraft, Airbus expects A330 deliveries of approximately 40 aircraft per year beginning in 2020 and the A350 to stay between a monthly rate of 9 and 10 aircraft.
Airbus Helicopters’ EBIT Adjusted increased to € 422 million (2018: € 380 million), mainly reflecting an increased contribution from services and lower research and development costs. This was reduced by a less favourable delivery mix.
EBIT Adjusted at Airbus Defence and Space declined to € 565 million (2018: € 935 million), mainly reflecting the lower performance in a competitive Space environment and efforts to support sales campaigns. The Division is targeting a restructuring programme to address its cost structure and restore profitability to a high single digit margin.
During 2019, 14 A400M military transport aircraft were delivered in line with the latest delivery schedule, bringing the in-service fleet to 88 aircraft at year-end. Several key milestones towards full capability were achieved in the year, including the simultaneous deployment of paratroopers and helicopter air-to-air refuelling dry contacts. In 2020, development activities will continue towards achieving the revised capability roadmap. Retrofit activities are progressing in line with the customer-agreed plan. While the rebaselining of the A400M programme was completed and significant progress has been made on technical capabilities, the outlook is increasingly challenging on exports during the launch contract phase, also in light of the repeatedly extended German export ban to Saudi Arabia. As a result, the Company has reassessed its export assumptions on future export deliveries for the launch contract phase and recognised a charge of € 1.2 billion in the fourth quarter of 2019.
Consolidated self-financed R&D expenses totalled € 3,358 million (2018: € 3,217 million).
Consolidated EBIT (reported) was € 1,339 million (2018: € 5,048 million), including Adjustments totalling a net € -5,607 million. These Adjustments comprised:
· € -3,598 million related to the penalties;
· € -1,212 million related to the A400M charge;
· € -221 million related to the suspension of defence export licences to Saudi Arabia by the German government, now prolonged to March 2020;
· € -202 million related to A380 programme cost;
· € -170 million related to the dollar pre-delivery payment mismatch and balance sheet revaluation;
· € -103 million related to Premium AEROTEC’s restructuring plan launched to improve its competitiveness;
· € -101 million of other costs, including compliance costs partially offset by positive capital gains from the Alestis Aerospace and PFW Aerospace divestments.
Consolidated reported loss per share of € -1.75 (2018 earnings per share: € 3.94) includes a negative impact from the financial result, mainly driven by the revaluation of financial instruments. The financial result was € -275 million (2018: € -763 million). The consolidated net loss(1) was € -1,362 million (2018 net income: € 3,054 million).
Consolidated free cash flow before M&A and customer financing improved by 21% to € 3,509 million (2018: € 2,912 million), mainly reflecting commercial aircraft deliveries and the earnings performance. Consolidated free cash flow was € 3,475 million (2018: € 3,505 million). The consolidated net cash position was € 12.5 billion on 31 December 2019 (year-end 2018: € 13.3 billion) after the 2018 dividend payment of € 1.3 billion and pension contribution of € 1.8 billion. The gross cash position on 31 December was € 22.7 billion (year-end 2018: € 22.2 billion).
The Board of Directors will propose the payment of a 2019 dividend of € 1.80 per share to the 2020 Annual General Meeting. This represents an increase of 9% over the 2018 dividend of
€ 1.65 per share. The payment date is 22 April 2020.
As the basis for its 2020 guidance, the Company assumes:
-The world economy and air traffic to grow in line with prevailing independent forecasts, which assume no major disruptions, including from the coronavirus.
-The current tariff regime to remain unchanged.
The 2020 earnings and FCF guidance is before M&A.
· Airbus targets around 880 commercial aircraft deliveries in 2020.
· On that basis:
Airbus expects to deliver an EBIT Adjusted of approximately € 7.5 billion, and
Free Cash Flow before M&A and Customer Financing of approximately € 4 billion before:
· € -3.6 billion for the penalty payments and;
· A negative mid-to-high triple digit million Euro amount for the consumption of compliance-related provisions for tax and legal disputes.