Airbus Se Unsp/Adr

Good morning, ladies and gentlemen. This is the Airbus Q1 2021 Results Release Conference Call. Guillaume Fourier, our CEO, and Dominik Asam, our CFO, will be presenting our results and answering your questions. This call is planned to last around one hour. This includes Q&A, which we'll conduct after the initial presentation. This call is also webcast. It can be accessed via our homepage, where we have set a special banner. Playback of this call will be accessible on the website, but there is no dedicated phone replay service. The supporting information package was emailed to you earlier this morning. It includes the slides, which we will now take you through, as well as the financial statements. Through this call, we will be making forward-looking statements. The package you received contains the safe harbor statement, which applies to this call as well. Please read it carefully. And now, over to Guillaume.

Thank you, Torsten. Good morning, ladies and gentlemen. Welcome to our Q1 2021 results call and thank you for joining us today. Together with Dominique, we will take you through our financial results. It's now more than one year since we were first hit by the COVID-19 pandemic and the status of the overall market environment in Q1 clearly demonstrates that the crisis is not yet over for our industry. Today, the global landscape varies significantly and the path to recovery is what we call not necessarily linear. We see that countries around the world are progressing on their national vaccination campaigns. However, they are doing it at different speeds and new emerging variants of the virus make the sanitary situation more complex and more difficult. However, some regions show encouraging signs of domestic air travel returning. Other regions, like Europe, have maintained or even reinforced their travel restrictions. And travel restrictions, especially if and when they are not well coordinated among countries, have an adverse impact on this traffic recovery. So we continue to face significant uncertainties which results in a lack of predictability, at least over the short term, and we think we need to continue to demonstrate our resilience. In the first quarter, we delivered 125 commercial aircraft, which gives us a good start in 2021. This year, in 2021, we do not expect the entire delivery profile to be the same as pre-COVID-19, or, of course, not the same as last year. Deliveries continue to be driven by the agreements negotiated with our customers in COVID time. Let's now look at our financial results. Due to this still uncertain environment, we maintained in Q1 a strong focus on cost and cash containment while making progress on our restructuring as planned. This is clearly reflected in our Q1 financials together with our Q1 delivery performance. As a result, our Q1 EBIT adjusted was €0.7 billion compared to €0.3 billion in Q1 last year. Our Q1 2021 free cash flow before M&M customer financing was plus €1.2 billion and it includes a strong positive phasing impact from working capital. Our net cash position increased to 5.6 plus 5.6 billion euros as of end of March 2021. During our full year 2020 disclosure, so by mid of Feb, we have established a 2021 guidance to provide some visibility in a complex business environment. And based on everything we see today, we keep our guidance unchanged. Let's look at our commercial position in more detail. Global air traffic started weaker into 2021 than industry forecasts had anticipated. This weakness was driven by deteriorations in most international markets, including domestic China, where citizens were requested to stay at home during the traditional Chinese New Year travel period. However, since March, and based on ASKs available 6 km, we see different developments across region. Domestic China is now above pre-crisis levels. Positive signs of recovery are also coming from domestic North America. Domestic Europe is on the contrary considerably lagging behind with not even half of the pre-crisis level reached in the last months and weeks. international traffic globally remains at a very low level and the recent deterioration in the sanitary situation as in India reminds us of the fragility of the recovery. In this mixed commercial environment, we are managing different priorities with different time horizons. For 2021, We maintain our focus on managing deliveries to our customers in this volatile situation with limited visibility while we closely monitor the health and in particular the financial health of our customers. For the period beyond 2021, we are now in a position to define the appropriate single aisle ramp-up profile. We continue to expect the market to recover and with a full recovery expected between 2023 and 25, with domestic and regional markets leading that recovery. That ramp-up profile needs to take into account that some customers will have to restore their balance sheets when exiting the crisis. Let me remind you of our orders and backlog in Q1. We booked 39 gross orders, including 38 single eyes. We saw 100 cancellations, which were already largely embedded in our backlog valuation that we shared with you as of the year end 2020. This number included 88 cancellations from one specific customer, which we recognized in February. As a result, net orders stood at minus 61 aircraft, and our backlog in units amounted to 6,998, so very close to 7,000 aircraft. Looking at helicopters, in Q1 2021, we booked 40 net orders versus 54 in Q1 last year. In 2021, we see good momentum for campaign in our home countries, especially in public services, while the commercial helicopter market remains soft. We welcome the most recent governmental orders such as the order from France, to purchase eight additional H225M and the second prototype of the so-called VSR 700 unmanned aerial system as part of the French stimulus plan to the aeronautical industry. Finally, in defense and space, in Q1 2021, our order intake was at 2 billion euros, representing a book to build of around 0.9, which is good for a first quarter. During the quarter, €0.8 billion orders were booked in space systems, including the UTELSAT order to build a geostationary telecommunication satellite, the contract signed with INTELSAT to build two 1SAT satellites, and the order from GSAT, the main operator in Japan, that has become the first Japanese telecommunications operator, to order a satellite from Europe. We also booked orders worth €0.8 billion in military aircrafts, including recurring orders in military services and 0.3 billion euros in connected intelligence. On FCAS, the Future Combat Air System, a lot of work has been done until now by the states and manufacturers. We have achieved agreements with our partners in all pillars under Airbus' lead for the so-called Demonstrator Phase 1B. Negotiations are now with the three customer nations, and it is and it remains our joint ambition to fully converge soon in order to move ahead for a timely contracting of this very important so-called demo phase 1b. On Eurodrone we are pleased with the progress made between the industrial partners and the government and we welcome the decision of the budget committee of the German Bundestag which is a key milestone before achieving contract signature. So overall, good progress in Q1. So now, Dominique will take you through our financials. Dominique, the floor is yours.

Thank you, Guillaume, and good morning, ladies and gentlemen. Our Q1 2021 revenues were broadly stable year on year. Our Q1 EBIT adjusted increased to €0.7 billion. This reflects the cost containment we continue to apply as long as we have to cope with significant uncertainties in our commercial environment. It also reflects a favorable mix and a positive impact from hedging. Going forward, we aim to make our cost savings more sustainable and to underpin our earnings and cash growth trajectory for the periods beyond 2021. Our research and development expenses decreased by 6% year-on-year, We continue to expect our 2021 full-year research and development expenses to be at a similar level as in 2020. Our Q1 earnings per share adjusted stand at 58 euro cent per share, based on an average of 784 million shares. Our Q1 free cash flow before M&A and customer financing was 1.2 billion euros. This is mainly driven by a strong positive phasing impact from working capital and reflects our continued efforts on cash containment. Now onto the next slide regarding our profitability. Q1 2021 EBIT recorded was 0.5 billion euros. The level of EBIT adjustments totaled a negative 0.2 billion and included 29 million negative related to A380 program cost, minus 177 million impact from foreign exchange mismatch and balance sheet revaluation, and minus 26 million of other costs, including compliance costs. Earnings per share reported include 59 million of positive financial results. It mainly reflects the revaluation of financial instruments and the evolution of the US dollar, as well as 43 million related to TASO Aviation, partly offset by a net interest result of minus 82 million euros. The tax rate on the core business is around 27%. The effective tax rate on net income is 34%, impacted by impairments of deferred tax assets in certain tax jurisdictions and on certain investments. The resulting net income is 0.4 billion euros with earnings per share reported at 46 euro cents. Now to our hedging activities. In Q1 2021, $4.5 billion of hedges matured at a rate of 1.16%, with associated EBIT impact as compared to 119 in Q1 2020. For the full year 2021, we expect an average hedge rate of 121 compared to 119 in 2020. As a result, for the remaining nine months, we expect a negative year-on-year impact. During the quarter, we further adjusted the phasing of our hedges by implementing $4.8 billion of rollovers. We also implemented 4.6 billion of forwards at a rate of 122. And $1.2 billion of hedges were disqualified. As a result, our total hedging portfolio in US dollar stands at $79.8 billion, with an average hedge rate of 126 versus 81 billion, also at 126 in December 2020. Now let's look at our cash evolution into 2021. Our gross cash flow from operations of 0.6 billion euros mainly reflects our EBIT adjusted and includes a 0.3 billion provision consumption related to the restructuring plan. Our working capital has decreased by 1 billion euros and includes a strong phasing impact from working capital also in our divisions. Year-to-date, the A400M continued to weigh on our free cash flow before M&A, but less so than in Q1 2020. Q1 CapEx was around minus 0.5 billion euros stable versus Q1 2020. For 2021, we expect our CapEx to be at a similar level as compared to 2020. Free cash flow reported was 1.2 billion euros. M&A activities accounted for just minus 7 million euros and customer financing represented an outflow of only minus 31 million euros. This low level of customer financing may not be sustainable going forward We intend to mitigate the impact from cash consumption via external financing sources with support from export credit agencies. Our net cash position has improved to 5.6 billion euros as end of March and our liquidity position remains strong and stood at 34.8 billion euros. We have extended the maturity of our supplemental liquidity line by six months, maintaining a high level of flexibility in the uncertain environment caused by COVID-19. Back to you.