Airbus today reported Q3 and first nine months results for 2014. It could be summarized with one sentence, “steady so”.
It is an Airbus group more in control of their destiny and programs then it has ever been, also when it was called EADS. There are still challenges in several programs but these are addressed from a position of strength and against a backdrop of these programs having passed their most risky periods.
First the financial results: revenue for the first 9 months were up 4% to € 40.5 bn, EBIT up with 12% to € 2.5 bn, both compared to first 9 months 2013. Free cash consumption is down to € 2.1 bn from € 4.7 bn last year and shall be break even on a full year basis.
Looking at the Airbus group divisions and their major programs the following can be noted:
Has already passed the order target for the year with 791 net orders until 1 October, the strong market for airliners continue. Airbus has also reached both European and US certification for A350-900 and delivery of first aircraft is planned for December to Qatar Airways. Airbus points out that the program is still challenging and can cause provisions, we judge the program to be past its most challenging phase however.
Airbus says they are not worried to firm up the 127 A330neo order commitments they have got, these commitments are not counted in the order tally of 791. We hear good things about the program with airlines. The one program which is still challenging when it comes to sales and execution is the A380, no new orders so far, just the cancellation of the Skymark deliveries. Airbus maintains that A380 will stop costing money to produce and deliver come end of 2015.
The market is weaker then expected, bookings was down to 208 from 276 units a year ago. Backlog has shrinked to 908 helicopters, about 3 years of production. EBIT margin is still acceptable at 5.7% on virtually flat deliveries and revenue.
Defense & Space
Defense is the problem child of the group, the large programs either don’t sell (Typhoon) or are hard to deliver to demanding customers (A400M). Airbus flagged that customers which has taken delivery of A400M are not fully pleased and that a program review will be made in time for full year results that can include further provisions for the program.
The highlight of the division is space which is developing well both for launchers and satellites and this will continue as Airbus sees it. In total revenue was down 2.2% to € 8.2 bn, cost control kept EBIT above 4% at € 370 m.
All in all no spectacular results but also no surprises. When comparing Airbus results with Boeing’s Q3 results one shall observe that Airbus takes the present development and ramp-up intensive period (A350, A320neo, A330neo and still A380) directly to the bottom line where Boeing uses program accounting and spreads development and ramp up costs for 787 (still costing the company to produce), 737 MAX and 777X over a longer period, the so call accounting block. One shall therefore compare these two on the civil airliner side over a long period of time to understand the real performance difference between them.