Global Investor Forum 2008

Transcription

1 Global Investor Forum 2008 Airbus Financial Workshop Seville, 17 th / 18 th January

2 Safe Harbor Statement Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and other forward-looking statements that are based on management s beliefs. These statements reflect the Company s views and assumptions as of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. When used in this document, words such as anticipate, believe, estimate, expect, may, intend, plan to and project are intended to identify forward-looking statements. Such forward-looking statements include, without limitation, projections for improvements in process and operations, new business opportunities, revenues and revenues growth, operating margin growth, cash flow, deliveries, launches, compliance with delivery schedules, performance against Company targets, new products, current and future markets for the Company products and other trend projections. This forward looking information is based upon a number of assumptions including without limitation: Assumption regarding demand Current and future markets for the Company s products and services Internal performance including the ability to successfully integrate EADS activities to control costs and maintain quality Customer financing Customer, supplier and subcontractor performance or contract negotiations Favourable outcomes of certain pending sales campaigns Forward looking statements are subject to uncertainty and actual future results and trends may differ materially depending on variety of factors including without limitation: General economic and labour conditions, including in particular economic conditions in Europe and North America, Legal, financial and governmental risk related to international transactions The Cyclical nature of some of the Company s businesses Volatility of the market for certain products and services Product performance risks Collective bargaining labour disputes Factors that result in significant and prolonged disruption to air travel world-wide The outcome of political and legal processes, including uncertainty regarding government funding of certain programs Consolidation among competitors in the aerospace industry The cost of developing, and the commercial success of new products Exchange rate and interest rate spread fluctuations between the Euro and the U.S. dollar and other currencies Legal proceeding and other economic, political and technological risk and uncertainties The Company disclaims any intention or obligation to update these forward-looking statements. Consequently the Company is not responsible for any consequences from using any of the below statements. Additional information regarding these factors is contained in the Company s registration document dated 25th April

3 The Context Huge exceptionals (A380, A350, A400M Complex accounting Tight IFRS rules EBIT & Cash management Target setting (rampup, P8, ) From accounting to accountability From complexity to simplicity Forecasting in crisis 3

4 M, USD 1.45 Key Drivers EBIT Cash Drivers Drivers Deliveries (Sales, Programs) Pricing (Sales, Programs, Finance) Unit Cost (Programs, Procurement, Operations) R&D / Continuing Development (Programs, Engineering) Non-Series (Continuing support, Customer services, IS projects, ) SG&A FX Pre-delivery payments (Sales, Finance) Inventory (Programs, Operations) CAPEX (Programs, Operations) Sales Financing (Finance, Sales) Reimbursable Launch Aid (Finance) Only the top functions are mentioned for illustration 4

5 Sales production matching Sales production matching aligns delivery planing with production capacity Single aisle and longrange: stable in spite of steep production rampup A380: challenging ramp-up Orders Production Orders Production Does not represent the real order book 5

6 Prices at Delivery vs Order Prices Several factors imply a significant difference between order intake prices and prices at delivery Delivery pricing is mainly a function of order intake pricing / policy of previous years Escalation based on economic indicators Customization on customers requests Type change on customers requests Characteristics: Caution in terms of mix and customer options These changes are volatile from one year to another one For customization, long-range aircraft deliveries have a higher impact on revenues 6

7 Escalation Escalation clause in purchase agreement This clause is negotiated between Airbus and customers This clause is applicable for the dates between purchase agreement signature and date of delivery This clause is based on external official indexes Therefore, escalation is unpredictable and volatile Main escalation clause components are: Labor index: Employment Cost Index for Workers in Aerospace manufacturing referenced as ECI SIC 3721W quarterly published by the US department of labor Material index: Industrial Commodities referenced as WPU03THRU15 published by the US Bureau of Labor Statistics 7

8 Revenue recognition Series revenues: At the time of delivery Hedged revenue at hedge rate Unhedged revenue at monthly average spot rate Revaluation of trade balances at the closing spot rate and of Pre Delivery Payments on aircraft delivered (see workshop $ impact) ; All qualifying maturing hedged impact revenues 8

9 Cost of Sales Direct Cost of Sales Make 1/3 Aerostructures / Equipment Materials 2/3 Make Aerostructure / Equipment Materials Trends before Power8 implementation 9

10 Customer Finance P&L Revenues Costs Provision movement Financial result Fin lease X X Op leases AVG X X X X 10

11 Non series / Others Customer Services activities Continuing support to the Programmes technical support to production / FAL Support from Engineering and CoEs jigs and tools depreciation / maintenance IS and company project cost Provisions for personnel costs Insurance cost Diversification Programmes 11

12 Research & Development Research & Technology: Upstream technology development. P&L impact is net of funding New developments: Self funded for Long-Range, A350XWB. Continuing development and customisation: SA & LR improvements, A380, customer services, cabin connectivity Risk Sharing Partners approach: No immediate P&L impact, but RSP spending monitored by Programme and Procurement IAS 38: R&D post-entry into Final Assembly Lines is capitalised 12

13 Forex and SG&A SG&A Central Function overheads Other CoE function overheads are calculated through the hourly rate into unit cost / NRC Power8 is allocated to direct cost of sales, non series, non recurring costs and SG&A Forex Cost planning is made in source currency, which enables simulations made on $ Output adjusted to a predefined planning rate e.g. $1.45, based on exposure levels Hedging benefit in revenues / EBIT 13

14 EBIT Net Result Bridge Interest result Repayable Launch Aid Interests on cash balances Customer Financing / Asset Management Corporate Debt Other financial result Unwinding of the discount of LMC, A380 settlements and A350 provision Reevaluation of US$ cash balances at closing spot rate 14

15 Key Cash Drivers Inventories: SA and LR stable in spite of steep production ramp-up A380 working capital investment Payables: Power 8 Maximise Cash increase payment terms PDP: Target profile - integral part of Power 8 Maximise Cash CAPEX: driven mainly by A350 XWB, holiday on base CAPEX Sales Financing: New additions are critically assessed and sell down opportunities evaluated -> > Record low level at the end of

16 Selected Airbus Programme Provisions and Liabilities (as of end Sept. 2007) Restructuring provision 0.7 bn (Power8) Restructuring costs only not the non recurring operational costs (such as parts redesign) Does not address fair value of assets held for sale Liquidated damages 1.5 bn A380 settlements Termination costs provision related to old A350 contracts Loss making contracts provisions 2.5 bn (at 1.42$/ ) A400M development costs overruns and penalties A380; A350 16

17 Loss Making Contracts (1/2) Unit costs of earlier deliveries bear the impact of the learning curve Revenues Cost increases get allocated to large number of aircraft Revenues Unit costs Average costs Airbus Programme accounting Launch contracts are structurally exposed to LMC because of: Commercial launch conditions High production costs incurred on early aircraft 17

18 Loss Making Contracts (2/2) Provision Reversal Series Margin Gross Margin Loss estimated on the overall contract (commercial contracts only) : Zero profit on early deliveries of the contract, losses covered by LMC reversal Followed by negative margin deliveries Followed by profit making deliveries 18

19 Provisions Consumption (w/o A400M) 4 100% 3 63% b 2 1 6% 30% 0 Total onw ards Restructuring Provisions Liquidated Damages LMC 19

20 Airbus Provision Volatility A350 & A380 Loss Making Contract provisions Vary with spot rate but accruals and reversals not linear with $/ rate (threshold effect) Vary with programme costs following cost review Accounted at present value under IFRS 20

21 Cash EBIT Planning and management are under control stored in a tool Any further questions contact: tool 21