Slide 1: 2002 Results: Performance & Discipline
2002 Results Performance & Discipline Philippe Camus - Rainer Hertrich, CEOs Hans Peter Ring, CFO Analysts meeting - Paris - March 10th, 2003 1
Slide 2: Safe Harbor Statement
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 dat
Slide 3: Content
Content 1. Group overview 2. Operating performance by division 3. Financials 4. Outlook 3 3
Slide 4: Meeting the economic challenge with strong financial discipline
Meeting the economic challenge • Performance and cash targets met • Book to bill greater than 1, strong order book … with strong financial discipline • prudence for continued market uncertainty 4 4
Slide 5: Business Highlights in 2002
Business Highlights in 2002 Airbus: - 303 delivered aircraft; 233 net orders incl. 120 easyJet a/c - Cash preserved and financing exposure limited - A380 review confirms program on track Defence: - DCS Turnaround to profitability - Contracts: Meteor 6 European nations, Taurus Germany, Tiger Australi
Slide 6: Strategic milestones
Strategic milestones · Agreements for Defence growth - EADS, Northrop, Thales and Finmeccanica teamed for NATO AGS (Air Ground Surveillance) - Northrop’s Global Hawk flies with EADS payload (Euro Hawk) - Full control of Paradigm (secure telecommunication for British MoD) - MBDA and Thales improve co
Slide 7: 2002 Financial overview
2002 Financial overview in € bn 2002 2001 Revenues 29.9 30.8 EBIT* 1.4 1.7 FCF before cust. financing ** 0.6 0.9 New orders 31.0 60.2 Dec. 2002 Dec. 2001 Net Cash position 1.2 1.5 Total Order book 168.3 183.3 * pre goodwill and exceptionals ** excluding investments in medium term securities ( 2002:
Slide 8: Successful cash management
Successful cash management · Maintained strong net cash position at € 1.2 bn · Customer financing exposure significantly contained · Pre Delivery Payment flow limits working capital requirement · Post-Sept 11th cost saving plans support strong CF from operations 8.9% 8.6% 2002 and working capital at
Slide 9: EBIT Contributors
EBIT Contributors EBIT* 2002 in € m Airbus 1,361 Ø Lower deliveries, higher R&D Aeronautics 261 Ø Commercial aviation downturn HQ Consolidation** 112 Ø HQ cost savings DCS 40 Ø Turnaround thanks to restructuring (80) MTA Ø One-time depreciation charge (268) Space Ø Cancellation, technical issues, re
Slide 10: Enhance Profitability and deliver on all promises
Enhance Profitability in €bn 3.5 3.5 EBIT* before-R&D 11.8% 1.8 2.1 R&D expenses 11.5% 2002 2001 EBIT margin before R&D 1.7 1.4 EBIT* FY2001 FY2002 … and deliver on all promises We promised and achieved Book-to-bill over one ü 1.04 EBIT* of 1.4 €bn ü € 1.4 bn Revenues stable ü € 29.9 bn Net cash pos
Slide 11: Content
Content 1. Group overview 2. Operating performance by division 3. Financials 4. Outlook 11 11
Slide 12: Airbus
Airbus €m 2002 2001 § EBIT margin before R&D up, Deliveries (in units) 303 325 resists decrease in deliveries Revenues § Absorption of market 19,512 20,549 changes through production R&D self-financed 1,682 1,425** flexibility in % of revenues 8.6% 6.9% § Gross order intake of 300 a/c EBIT* 1,361 1,
Slide 13: A380 in full scale development
A380 in full scale development Self-financed R&D expensed by quarter in € m 740 650 628 445 473 480 412 403 450 356 322 Cumulative 250 126 150 154 193 A380 R&D 93 101 64 = 1.3€bn 50 Q1 2001 Q2 2001 Q3 2001 Q4 2001 Q1 2002 Q2 2002 Q3 2002 Q4 2002 A380 R&D EADS total R&D Capex by quarter in € m 904 10
Slide 14: MTA
MTA €m 2002 2001 Revenues 524 547 § Fairchild Dornier insolvency R&D self-financed 40 53 impact on EBIT (-54 €m) and in % of revenues 7.6% 9.7% order book (-0.5 €bn) EBIT* (80) 1 § EADS selected partner in in % of revenues 0.2% Deepwater programme Order book 633 1,320 § A400M contract (17.7 €bn**):
Slide 15: Aeronautics
Aeronautics €m 2002 2001 § Civil aviation downturn and R&D increase impact EBIT Revenues 5,304 5,065 § Eurocopter: R&D self-financed 150 132 Q 367 a/c deliveries in % of revenues 2.8% 2.6% Q No.1 worldwide in orders EBIT* 261 308 in % of revenues 4.9% 6.1% Q Partner in Deepwater Order book programme
Slide 16: Space
Space § EBIT impacted by technical €m 2002 2001 difficulties, investment Revenues 2,216 2,439 depreciations, one contract R&D self-financed cancellation and restructuring 59 60 in % of revenues 2.7% 2.5% § Order intake increase due to EBIT* (268) (222) M51 development, in % of revenues Amazonas and
Slide 17: Space: roadmap to profitability
Space: roadmap to profitability · Starting point : Current difficulties - Telecom market degradation exacerbates industry overcapacity - Inherent programme risks, Ariane 5 accident - Budgets constrain institutional and scientific programs - EBIT losses stem from risk provisions, depreciation and res
Slide 18: Space restructuring
Space restructuring Annual cost saving · Plan initiated in 2002 target by 2004 - Reorganisation of satellite BU in 3 prime and 1 sub-systems divisions Sourcing 29% - Headcount reduction of 1,600 people mostly in 2003 - Full set of actions : Make or Buy policy, strengthen 71% expertise, synergies wit
Slide 19: Defence and Civil Systems
Defence and Civil Systems €m 2002 2001 § EBIT* turnaround on track, break-even target exceeded Revenues 3,306 3,345 § Site optimization by centres R&D self-financed 167 173 of competence completed in % of revenues 5.1% 5.2% § Missiles Systems: EBIT* 40 (79) in % of revenues 1.2% Meteor (0.9 €bn EADS
Slide 20: Content
Content 1. Group overview 2. Operating performance by division 3. Financials 4. Outlook 20 20
Slide 21: Profit & loss highlights
Profit & loss highlights 2002 2001 in % of in % of €m Revenues €m Revenues Revenues 29,901 30,798 self-financed R&D 2,096 7.0% 1,841 ** 6.0% EBITDA 3,031 10.1% 3,213 10.4% EBIT* 1,426 4.8% 1,694 5.5% EBIT* before R&D 3,522 11.8% 3,535 ** 11.5% Interest result (81) (0.3%) 63 0.2% Taxes (453) (1.5%) (
Slide 22: Goodwill and exceptionals
Goodwill and exceptionals Amortisation Value as of in € m Dec. 31, 2002 2002 2001 Net Income (299) 1,372 Goodwill amortisation 9,586 936 1,466 - Normal amortisation 586 676 - Extraordinary amortisation / impairment 350 790 Exceptionals 243 (1,944) - Fair value adjustments to fixed assets 1,298 227 2
Slide 23: Restructuring, write-off and disposal items included in EBIT*
Restructuring, write-off and disposal items included in EBIT* €m 2002 2001 EBIT * 1,426 1,694 EBIT* margin (% of revenues) 4.8% 5.5% EADS EBIT* includes the following items Airbus Aircelle disposal 63 - Restructuring - (96) MTA Asset depreciation (54) - Space Contract cancellation (62) - Asset depre
Slide 24: Development of net cash
Development of net cash in € m 2002 2001 Net cash at the beginning of the period 1,533 1,305 Gross Cash Flow from Operations* 1,862 2,654 Change in working capital 804 2 Cash used for investing activities** (2,953) (1,882) of which Industrial Capex (net) *** (2,093) (1,311) of which Customer Financi
Slide 25: Strict control of customer financing
Strict control of customer financing Outstanding gross customer financing exposure at year-end (US$bn) A discretionary tool … 7 • Granted on a case-by-case basis 0,9 0,88 6 • Pricing in line with market conditions 5 0,87 0,82 0,64 • Active sell-down policy 4 5,76 6,07 0,73 ($0.8bn sold in 2002) 3 4,
Slide 26: EADS has locked in attractive rates to secure future earnings
EADS has locked in attractive rates to secure future earnings Total hedge portfolio (US$ 40 bn)* Volume already hedged US$ bn 12 10.9 10 8.3 8 6.3 5.7 6 4.6 4.2 4 1.7 2 0.6 0 2003 2004 2005 2006 2007 2008 2009 2010 $/€ 0.96 0.94 0.94 0.95 0.95 0.95 0.95 0.98 $/£ 1.53 1.53 1.47 1.46 1.46 1.46 1.46 1.
Slide 27: Content
Content 1. Group overview 2. Operating performance by division 3. Financials 4. Outlook 27 27
Slide 28: 2003 Guidance
2003 Guidance Prudent financial targets preserve our flexibility to respond to market changes · Based on 300 deliveries and the current $ rate (1€ = 1.10 $), we expect 2003 revenues in the same range as 2002. Growth from the first time 100% consolidation of Astrium and the ramp up of Defence program
Slide 29: EADS delivers
EADS delivers Calculated and realistic approach to: · Monitor and manage market uncertainties · Enhance defence growth · Turn Space around · Generate value through efficiencies 29 29
Slide 30: Appendix
Appendix 30
Slide 31: Balance Sheet Highlights
Balance Sheet Highlights Dec. Dec. in € m 2002 2001 Assets 47,400 48,715 of which Goodwill 9,586 10,442 of which cash & equivalents, securities 6,200 8,033 of which positive hedge mark-to-market 2,819 54 Stockholders' equity 12,765 9,877 of which OCI (Other Comprehensive Income) 2,452 (1,278) Minori
Slide 32: Consolidated Statements of Income
Consolidated Statements of Income Dec. 2002 Dec. 2001 Variation €m % €m % €m % Revenues 29,901 100% 30,798 100% (897) (3%) Cost of sales (24,465) (82%) (25,440)* (83%) 975 (4%) Gross margin 5,436 18% 5,358 17% 78 1% Selling, general administration (2,251) (8%) (2,186) (7%) 65 (3%) Research and devel
Slide 33: Net Income pre goodwill and exceptionals
Net Income pre goodwill and exceptionals in € m Dec. 2002 Dec. 2001 Net Income (299) 1,372 Goodwill amortisation 936 1,466 Exceptionals: Dilution gain Airbus UK / MBDA (2,794) Fair value adjustment on fixed assets 227 260 Fair value adjustment on financial assets 315 Fair value adjustment on invento
Slide 34: EBIT* calculation
EBIT* calculation in € m Dec. 2002 Dec. 2001 Result before financial inc. and 160 2,514 income tax Income from investments 87 (342) EBIT 247 2,172 Exceptionals: Goodwill amortisation 936 1,466 Fair value adjustment 243 850 Dilution gain Airbus UK and MBDA 0 2,794 EBIT* 1,426 1,694 * pre goodwill and
Slide 35: Quarterly revenues breakdown (cumulative)
Quarterly revenues breakdown (cumulative) Q1 Q2 Q3 Q4 in €m 2002 2001 2002 2001 2002 2001 2002 2001 Airbus 4,646 4,600 9,870 9,982 13,750 14,431 19,512 20,549 MTA 101 70 234 195 310 306 524 547 Aeronautics 936 883 2,226 2,020 3,363 3,161 5,304 5,065 Space 426 402 882 1,054 1,389 1,543 2,216 2,439 DC
Slide 36: Quarterly EBIT* breakdown (cumulative)
Quarterly EBIT* breakdown (cumulative) Q1 Q2 Q3 Q4 in €m 2002 2001 2002 2001 2002 2001 2002 2001 Airbus 396 427 874 797 1,072 1,131 1,361 1,655 MTA (12) (12) (72) (21) (79) (12) (80) 1 Aeronautics 16 19 63 85 132 144 261 308 Space (33) 2 (85) 29 (101) (8) (268) (222) DCS (72) (87) (71) (128) (91) (1
Slide 37: Customer financing exposure
Customer financing exposure as of December 31 all figures in € m Figures for 100% Airbus 2002 2001 closing rate $/€ 1.05 0.88 Total Gross exposure* 3,581 3,505 of which off-balance sheet 891 1,236 Estimate value of collateral (2,062) (1,988) Net exposure 1,519 1,517 Provision (1,519) (1,517) AIRBUS
Slide 38: Dividend policy
Dividend policy EADS Board of Directors propose to pay 0.30 € per share as dividend for 2002. 0,6 0,5 0,5 0,5 0,4 0,3 0,3 0,2 0,1 0 2000 2001 2002 38 38
Slide 39: EADS regional breakdown
EADS regional breakdown 2001 revenues 2002 revenues Backlog Rest of the at year-end 2002 11% World 8% Rest of the Asia 9% World 9% 11% 34% North 35% Asia Europe America 10% 45% 34% 46% Europe 48% North America 39 39
Slide 40: Defence: strong growth across segments
Defence: strong growth across segments Eurocopter 2002 Revenues Military Aircraft 4% 5% Space 8% 17% Systems, Defence Electronics, Services Defence Missiles 20% 22% 21% Telecom Civil 16% 7% 80% Military Transport Aircraft Airbus Revenues € bn Airbus 10 Space 8 Missiles Defence revenues: 6 Telecom Ta
Slide 41: New programmes will drive growth in defence secured by strong backlog
New programmes will drive growth in defence secured by strong backlog 4 Revenues €bn Helios Revenues € bn Military Launcher Space 3.5 MTA programs 3 A400M* 2.5 Storm Shadow 2 Meteor Aster Tiger 1.5 NH90 1 Eurofighter 0.5 2002 e2003 e2004 e2005 * signature expected in 2003 41 41