Free cash flow before M&A and customer financing € 1.0 billion
Charges on certain satellite development programmes
Airbus SE (stock exchange symbol: AIR) reported consolidated financial results for the nine months ended 30 September 2023.
“We continue to make progress on our operational plan in a global environment that has become increasingly complex. The nine-month earnings reflect higher commercial aircraft deliveries, the good performance in helicopters as well as charges linked to the reassessment of certain satellite development programmes,”said Guillaume Faury, Airbus Chief Executive Officer. “Demand for our commercial aircraft is very strong with a continuing recovery in the widebody market. We expect the supply chain to remain challenging as we progress on the production ramp-up. In that context, we maintain our guidance for the full year.”
Gross commercial aircraft orders totalled 1,280 (9m 2022: 856 aircraft) with net orders of 1,241 aircraft after cancellations (9m 2022: 647 aircraft). The order backlog amounted to 7,992 commercial aircraft at the end of September 2023. Airbus Helicopters registered 191 net orders (9m 2022: 246 units) which were well spread across programmes. Airbus Defence and Space’s order intake by value was € 8.5 billion (9m 2022: € 8.0 billion), including the renewal of the in-service support contract for Germany’s A400M fleet.
Consolidatedrevenues increased 12 percent year-on-year to € 42.6 billion (9m 2022: € 38.1 billion). A total of 488 commercial aircraft were delivered (9m 2022: 437(1)(2) aircraft), comprising 41 A220s, 391 A320 Family, 20 A330sand 36 A350s.Revenues generated by Airbus’ commercial aircraft activities increased 18 percent, mainly reflecting the higher number of deliveries.Airbus Helicopters’ deliveries increased slightly to 197 units (9m 2022: 193 units) with revenues rising 3 percent, reflecting the overall performance across programmes and services. Revenues at Airbus Defence and Space decreased 6 percent, mainly driven by a backloaded A400M delivery profile and updated Estimates at Completion of certain satellite development programmes. A total of 4 A400M military airlifters were delivered (9m 2022: 7 aircraft).
Consolidated EBIT Adjusted – an alternativeperformance 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 – was € 3,631 million (9m 2022: € 3,481 million).
EBIT Adjusted related to Airbus’ commercial aircraft activities increased to € 3,216 million (9m 2022: € 2,875 million), reflecting the higher deliveries and a more favourable hedge rate, partially offset by investments for preparing the future. 9m 2022 included the non-recurring positive impact from retirement obligations partly offset by the impact resulting from international sanctions against Russia. In H1 2023 provisions were released to reflect further progress made on compliance-related topics.
The ramp-up on the A220 programme is continuing towards a monthly production rate of 14 aircraft in 2026. Production on the A320 Family programme is progressing well towards the previously announced rate of 75 aircraft per month in 2026. The modernisation and digitalisation of the industrial system continues, as illustrated by the inauguration of the A321XLR equipment installation hangar in Hamburg. The A321XLR is progressing towards certification, with entry-into-service expected to take place in Q2 2024.
On widebody aircraft, the Company has decided to increase the production rate for the A350 to 10 aircraft a month in 2026 and continues to target rate 4 for the A330 in 2024.
Airbus Helicopters’ EBIT Adjusted increased to € 417 million (9m 2022: € 380 million), reflecting the overall performance across programmes and services. 9m 2022 also included net positive non-recurring elements.
EBIT Adjusted at Airbus Defence and Space decreased to € -1 million (9m 2022: € 231 million).It included charges of € 0.4 billion related to updated Estimates at Completion of certain satellite development programmes, mostly recorded in the third quarter. 9m 2022 also included net positive non-recurring elements.
On the A400M programme, development activities continue towards achieving the revised capability roadmap. Retrofit activities are progressing in close alignment with the customer. No further net material impact was recognised in the first nine months of 2023. Risks remain on the qualification of technical capabilities and associated costs, on aircraft operational reliability, on cost reductions and on securing overall volume as per the revised baseline.
In order to cope with an evolving defence and security environment, the Company has launched a transformation of its Defence and Space division. This aims to adapt ways of working, focusing on rigorous programme execution and a rebalancing of risks and opportunities to reinforce end-to-end accountability and ownership in the business lines and improve competitiveness.
ConsolidatedEBIT(reported) amounted to € 2,712 million (9m 2022: € 3,552 million), including net Adjustments of € -919 million.
These Adjustments comprised:
€ -806 million related to the dollar pre-delivery payment mismatch and balance sheet revaluation, of which € -155 million were in Q3. This mainly reflects the phasing impact arising from the difference between transaction date and delivery date;
€ -57 million related to the Aerostructures transformation, of which € -23 million were in Q3;
€ -56 million of other costs including compliance, of which € -10 million were in Q3.
The financial result was € 231 million (9m 2022: € -306 million). It mainly reflects a positive impact from the revaluation of certain equity investments and the evolution of the US dollar, partly offset by negative impacts from the revaluation of financial instruments. Consolidated net income(3) was € 2,332 million (9m 2022: € 2,568 million) with consolidated reported earnings per share of € 2.96 (9m 2022: € 3.26).
Consolidated free cash flowbefore M&A and customer financing was € 1,037 million (9m 2022: € 2,899 million), mainly reflecting the inventory build-up in Q3, consistent with the backloaded delivery profile and production ramp-up.
Consolidated free cash flow of € 718 million (9m 2022: € 2,502 million) included € -261 million of customer financing, mostly related to the planned execution of certain contractual obligations. The gross cash position stood at € 22.4 billion at the end of September 2023 (year-end 2022: € 23.6 billion), with a consolidated net cash position of € 8.3 billion (year-end 2022: € 9.4 billion).
The guidance issued in February 2023 is maintained.
As the basis for its 2023 guidance, the Company assumes no additional disruptions to the world economy, air traffic, the supply chain, the Company’s internal operations, and its ability to deliver products and services.
The Company’s 2023 guidance is before M&A.
On that basis, the Company targets to achieve in 2023 around:
720 commercial aircraft deliveries;
EBIT Adjusted of € 6.0 billion;
Free Cash Flow before M&A and Customer Financing of € 3.0 billion.
On 26 October 2023, Airbus received notice from the US State Department that the Consent Agreement it had entered into in January 2020 had been closed, based on fulfilment of its terms. This notice, as well as the earlier discontinuation of the deferred prosecution agreements of Airbus with the UK Serious Fraud Office, France’s Parquet National Financier and the US Department of Justice, concludes a three-year probation period during which Airbus demonstrated to the authorities its commitment to compliance and integrity.
This enables Airbus to move forward and continue to grow in a sustainable and responsible manner.
Consolidated Airbus – Nine-Month (9m) 2023 Results
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