Airbus Reports Q1 Results Which Leaves Investors Happy

Author's Avatar
May 05, 2015

On April 30, the second-largest maker of commercial jetliners, Airbus (EADSY, Financial), reported its first quarter earnings almost a week after its archrival, Boeing (BA, Financial), disappointed its investors by posting a weak earnings report. The terrific set of numbers posted by Airbus send its stock northwards soon after the earnings release. In fact the earnings were boosted by the sale of the stake in French combat-jet maker Dassault Aviation SA, in which it still owns around 23% to date. The European plane maker began reducing its stake in Dassault from 2014 and expects such reduction to continue till 2016. Let’s quickly take a glance at the quarter highlights of the European airplane maker.

The glorious number set

The net income for the period was 792 million euros ($880 million) compared to 439 million euros reported a year earlier. During the quarter, Airbus booked a gain of 697 million euros from the sale of 17.5% stake in Dassault, which lifted its earnings for the quarter. CEO Tom Enders stated during the earnings call, “We had a good start into 2015, with a solid operational performance and improved cash generation, further supported by asset sales…”

However, sales showed a decline of 4% to 12.1 billion euros since the European airplane manufacturer delivered 134 jets in the first quarter of the year, down from 141 it delivered in the year-ago similar period. Interestingly, the order intake for the first quarter was at 21 billion euros, somewhat close to what the airplane maker had seen almost a year back in the same quarter.

The selloff of its stake in Dassault improved the free cash flow before mergers and acquisitions for Airbus boosting free cash flow to 452 million euros from the year ago outflow of 2.03 billion euros. So, this was a stellar improvement in cash flow generated through sale of the Dassault shares which led to generation of 1.6 billion euros as proceeds from sell-off. It is to be noted that, if the shares of Dassault were not sold off during the first quarter, it would have led to outflow of 1.1 billion euros as free cash flow.

Earnings before interest, tax and one-time items witnessed a decline to 651 million euros from 700 million euros posted a year back, but did beat the Bloomberg analysts’ estimate of 602 million euros.

Moving ahead in the next quarters

The management has promised investors to manage the cash generation effectively and to improve it in the coming quarters. During the earnings conference on last Thursday, the company shared its plans to deliver around 15 of A350 jetliners by the end of the year, and also emphasized that the production cost of the A350 jetliner has been coming down in line with expectations.

Mr. Enders even commented, “We will review capital allocation toward the end of the year…” The company expects the commercial jetliners’ sales to show a rebound towards the second half of the year as Airbus is targeting to ship more planes this year than what it intended to do in the previous year. Last year, Airbus delivered a record 629 planes, and this year it’s aiming to create a new record in terms of plane deliveries.

In May this year, the company would seek shareholders’ approval to buy back an extra 10% of its stock. Airbus’ CFO, Mr. Wilhelm stated that the plane maker was making rapid progress on building its new A350 jetliner.

In fact, the management remains upbeat on Airbus meeting its full-year targets. It expects to break even in 2015 on production of the A380 superjumbo jet. The company has reiterated on its 2015 guidance for “higher revenues and a slight increase in Ebit before one-offs.”

Parting word

Airbus remains a prominent player in the airplane manufacturing industry and that is well reflected through the shining numbers posted in the first quarter of the current fiscal year. Let’s keep a watch on the plane maker’s upcoming moves in the coming quarters.