Airbus Se Unsp/Adr

have a 9-month 2021 results release conference call. Guillaume Faurie, our CEO, and Dominique Adam, our CFO, will be presenting our results and answering your questions. This call is planned to last around an hour. This includes Q&A, which we will 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, as 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. Throughout 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. Now, over to Guillaume.

Thank you, Hélène, and welcome on board. Good morning, ladies and gentlemen, and thank you for joining us today for our 9-month 2021 results call. It's good to speak to you again after having had the pleasure to meet some of you during our roadshow in New York just before the summer break. Dominique and myself will run you through our financial results, and we are proud of doing it for the first time for a company being part of two European prime indices, the CAC 40 and the DAX 40. Let's start with our commercial aircraft deliveries. In Q3, we delivered 127 aircraft to our customers, including one operating lease. This takes our year-to-date delivery number to 424 aircraft, compared to 341 aircraft in the first nine months of 2020. So we feel we are on track to achieve our 2021 delivery guidance of around 600 commercial aircraft. Our nine-month EBIT adjusted was at 3.4 billion euros compared to minus 0.1 billion euros in the first nine months of 2020. It reflects our commercial aircraft deliveries, of course, as well as our efforts on cost containment and competitiveness. Our Q3 EBIT adjusted benefited from a reduction of risk exposures, which enabled us to release some provisions. In Q3, we began to see an increase of our cost base as we are transitioning back to normalized business activities and as we started to ramp up the A320 production. Our nine months free cash flow before M&A and customer financing was at 2.3 billion euros and included a strong positive phasing impact on working capital. On the operational side, we raised our A320 family monthly production rate as planned and our supply chain is now fully engaged in the ramp-up. After almost 18 months of stable rates, we are managing individual cases of supplier difficulties while we are ramping up according to our plan. In the context of global recovery, we are closely monitoring potential risks to our ecosystem, including the availability of resources. We continue to work closely with our suppliers, striving to ensure that the right industrial and supply chain capabilities are in place. At the same time, we focus on the long-term competitiveness of our industrial operations in particular on the transformation of our aero structure assembly value chain. On this subject, we continue to work on solutions with our social partners. When it comes to the guidance, we keep our full-year commercial aircraft delivery guidance unchanged. Following our nine-month financial performance, we raise our 2020 wide guidance for EBIT adjusted and free cash flow before M&A and customer financing. Let's now have a look at our commercial environment. Here the crisis is not yet over, as everybody knows, but the aviation industry has started to emerge from it. In Q3, global air traffic has further recovered, continuing the positive trend which we have seen since the beginning of the year, and I say this prudently. Domestic travel is at 70% of its pre-crisis level, international air traffic is still at low levels, but we've seen some real progress, particularly for Europe and North America, which should be further supported by the reopening of the US for vaccinated EU passengers when it comes to North Atlantic. However, key markets can still be volatile, for example China, which lost more than 50% of its air travel activities within one month during the summer, and then recovered. In the context of our recent decisions to launch the A350 freighter derivative, let me also mention that the air cargo market has remained well above the pre-crisis levels. All in all, we continue to expect the market to recover between 2023 and 2025, with domestic and regional markets clearly leading the recovery. Now, let me remind you of our orders and backlog. In the 9 months, we booked 270 gross orders, of which 256 single-iron. In Q3, we recorded orders for 105 aircraft, including 7 A330 Neos. We saw 137 cancellations year-to-date, of which only 10 in Q3. These cancellations in 9 months were largely anticipated and already embedded in our backlog valuation as of year-end 2020. As a result, net orders were positive at 133 aircraft and our backlog in units amounted to 6894 aircraft. Moving to Vertical Lift. In September, we announced plans for the City Airbus Next Gen. I'm fully excited about it. It is a new fully electric vehicle for sustainable urban air mobility. Airbus is here leveraging several years of research and demonstrator development to plan for a first prototype in 2023, which paves the way towards certification in 2025. And looking at helicopters, in the 9 months 21, we booked 185 net orders, compared to 143 in the 9 months 2020. In Q3, we recorded several orders in the light segments, And in 2021, we see good and positive momentum for large campaigns in our home countries. Finally, in defense and space, in the nine months 2021, our ordering stage was at 10.1 billion euros, and this represents a 23% increase year on year. During the third quarter alone, orders were booked in the amount of 6.6 billion euros. This includes the order by the Indian Air Force for the acquisition of 56 C-295 aircraft to replace its legacy fields. The support and spare contract renewal for the German and Spanish Eurofighter fields. The order by the Republic of Kazakhstan of two Airbus A400M, becoming the ninth operator of the aircraft. This new export contract brings the total number of A400M orders 176 units. Let me take this opportunity to highlight the crucial role played by our Airbus military aircraft in the context of the recent Kabul evacuation, Afghanistan, which involved 25 A400Ms from 7 customer nations and 9 A330MRTTs, tankers, from 6 different operators. This underlines once again the critical asset these aircraft have become for our customers, and more generally, the role that our defense solutions play in protecting people's lives and providing humanitarian relief. In line with the United Nations Sustainable Development Goals, it also demonstrates how we contribute to safety, stability, and prosperity worldwide by developing defense and security solutions that promote the rule of law, freedom, and democratic values. In space systems, Q3 orders include the remaining portion of the contract to design and manufacture six Galileo second-generation satellites. And we also continue to see good momentum in the satellite business. The second satellite of Pleiad Neo Earth Observation Constellation was successfully launched in August, which enabled us to start delivering to our customers in the very high-resolution markets. On ESCAT, we very much welcome the signing of the third implementation agreement for the so-called Demo Phases 1, B and 2, which marks once more the support of Spain, France and Germany for this program. Airbus is proud to be part of the future combattant system, which is key to secure national sovereignty and European strategic autonomy with respect to operational, technological and industrial capabilities for the 21st century. Beyond EPCAT and following the recent German federal elections, we are pleased to see among the German political parties the continuation of the widely shared commitment to strengthen European cooperation, including in the area of defense. For Eurodrome, we continue to progress towards contract signature with OCA and Now, Dominique will take you through our financials. Dominique, the floor is yours.

Thank you, Guillaume, and good morning, ladies and gentlemen. Our nine-month 2021 revenues increased to €35.2 billion, up 17% year-on-year, mainly reflecting the higher number of commercial aircraft deliveries. Our EBIT adjusted increased to 3.4 billion euros in the nine months of 2021, up from minus 0.1 billion in the prior year's period, which included 1 billion of charges due to impairments and write-offs triggered by COVID-19. The strong year-on-year improvement of our EBIT adjusted is mainly driven by the commercial aircraft's delivery performance and our efforts on cost containment and competitiveness. As an example, we reviewed the COVID-19 related charges and reassessed the level of exposure, which had a positive impact on our evidence-adjusted. At the same time, in Q3, we saw the progressive resumption of activities that will further accelerate in the coming months. On research and development, slightly lower than in 2020. Some expenses previously foreseen in 2021 will now be incurred in 2022 and we will ramp up our R&D next year. Our 9-month earnings per share adjusted stood at €2.95 per share based on an average of 785 million shares. Our 9-month fee cash flow before M&A and customer financing was at €2.3 billion. which is expected to be neutralized in Q4 2021. All in all, in the nine months, we saw a good number of commercial aircraft deliveries and we focused on competitiveness while we were still managing our costs in a crisis mode up to H1. We began to resume activities in the third quarter with further acceleration expected for the fourth quarter. In the nine months, we also benefited from a favorable hedge rate and from some provision releases. As of the 9 months 2021 EBIT reported was also 3.4 billion. The level of EBIT adjustments was a net positive of 0.1 billion in total, including 190 million related to the A380 program, of which 45 million booked in Q3, minus 165 negative impacts from foreign exchange mismatch and balance sheet revaluation, of which only 5 million in Q3. plus 43 million of other adjustments including compliance costs of which minus 6 million in Q3. Earnings per share recorded includes minus 172 million of financial results. It mainly reflects the net interest results of minus 233 million euros, partly offset by plus 63 million euros related to Dassault Aviation. The tax rate for The resulting net income is 2.6 billion euros, with earnings per share reported of 3.36 euros. Now to our hedging activities. In the nine months of 2021, $15.4 billion of hedges matured, with associated debit impact at the rate of 1.19 versus 1.20, compared to the same period last year. For the full year 2021, we expect an average hedge rate As a result, we expect the hedge rate for the remaining three months to be less favorable, both year-in-year and in comparison with the nine-month 2021 average. In my nine months 2021, we implemented $22.8 billion of overhangs at a rate of 1.22, of which $12.1 billion in Q3 2021, at a rate of 1.21, mainly for the years 2022 and 2021. This translated into improved average hedge rates for those years. Our total hedging portfolio in US dollar, including 1.2 billion of hedges disqualified in Q1 2021, is now at 87.1 billion with an average hedge rate of 1.36 versus $81 billion also at 1.26 in December 2020. Now let's look at our cash evolution in the 9 months 21. Gross cash from operations was at 2.7 billion euros, mainly reflecting our EBIT adjusted and including a 0.5 billion provision consumption related to the restructuring plan. Our working capital has decreased by 0.8 billion euros. It includes a significant positive phasing impact from the timing of receipts and payments partly offset by inventory build and divisions reflecting the delivery profile. Yesterday, the A400M continued to weigh on our free cash flow before M&A, but less so than in the nine months of 2020. Nine-month capital expenditures were around €1.2 billion negative, broadly nine with the nine-month 20 level. For 2021, we continue to expect our capital expenditures to be around €2 billion cash out. Free cash flow reported was 2.3 billion euros. M&A activities accounted for only minus 14 million euros, while customer financing represented an inflow of 62 million euros. The aircraft financing environment remained solid with sufficient liquidity in financial markets for our products. We also benefited from the support of export credit agencies. When it comes to our fiscal year 2021, free cash flow, and in particular looking at our working capital, We expect the nine-month failing effect to be partially neutralized in the fourth quarter and to see an impact from our single aisle wrap-up. Our net cash position has improved to 6.7 billion euros as of the end of September and our liquidity position remains strong and stood at 27.7 billion euros. Given the increase of our net cash position and our robust liquidity, we decided not to renew ungrown €6.2 billion supplemental liquidity line which matured in September. In the meanwhile, we extended the maturity of our €6 billion revolving syndicated credit facilities by one year. Going forward, we will continue to adopt an active approach when it comes to managing our liquidity with the objective of maintaining our robust credit rating. And now back to the owner.