Airbus Se Unsp/Adr

Good evening, ladies and gentlemen. This is the Airbus Nine Moms 2023 results release conference call. Guillaume Faury, our CEO, and Thomas Topfer, 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 presentation. This call is also webcast. It can be accessed via our homepage by clicking on the dedicated banner. Playback of this call will be accessible on our website, but there is no dedicated phone replay service. The supporting information package was published on our website earlier today. 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. I invite you to refer to our safe harbor statement that appears in the presentation slide, which applies to this call as well. Please read them carefully. And now, over to you, Guillaume.

Thank you, Hélène, and hello, ladies and gentlemen, and thank you for joining us today for our nine-month 2023 results call. I'm here in Amsterdam with Thomas, our CFO who joined the team at the beginning of September. warm welcome again thomas since then we've been working closely and i'm very happy to present the nine months results today with thomas so let me start with a high level overview operationally we continue to make progress on our plan i have to say it has not been and still is not a walk in the park as the global environment has become increasingly complex it means that management of the supply chain remains a crucial part of our activities. And there, while the situation is progressively getting better, our needs for material and components keep increasing as we continue to ramp up. So we expect the supply chain to remain challenging for a while, and we expect the ramp up to continue to be paced by a few critical suppliers. This is notably the case for engines. where we continue to work closely with manufacturers in order to secure deliveries for production ramp-up as well as the support of the fleet. In Q3, we delivered 172 commercial aircraft. This brings our year-to-date deliveries to 488 aircraft as compared to 437 last year, so in line with our plan. And we started Q4 on the same track as shown by our October deliveries, 71 commercial airplanes in October. Our EBIT adjusted to that 3.6 billion euros. This reflects the commercial aircraft deliveries and the good performance of our helicopter division. It also includes charges recorded to reflect the reassessment of certain of our satellite development programs. Our free cash flow before M&M customer financing was 1 billion euro, mainly reflecting the inventory buildup in Q3, consistent with the back-loaded delivery profile and the ramp-up. On that basis, we maintain our 2023 guidance while acknowledging that the charges recorded in our space business are putting some additional pressure on EBIT adjusted. Let's now look at our commercial Positioning, aircraft continue to improve in the third quarter, and forward ticket sales indicate a sustained growth for air travel, despite inflationary pressures and higher fuel prices. In nine months, we booked 1,280 gross orders, including 200 in Q3. On the A220, we booked 33 gross orders in nine months. The recently announced order from Air New Guinea for six aircraft is not yet reflected in our order book. Looking at the A320 family, we booked 1,087 gross orders, including 149 in the third quarter, bringing our backlog to 6,754 aircraft. Moving to the white bodies, we recorded 160 gross orders as of including 28 A330s and 23 A350s in Q3, confirming the recovery of the wide-body market. Nine-month net orders amounted to 1,241 aircraft, following 39 cancellations, and our backlog in units stood at almost 8,000, being at 7,992 aircraft at the end of September. Looking at helicopters, in nine months we booked 191 net orders versus 246 in the nine months 2022. And these 191 net orders are well spread across programs. In this quarter we signed an agreement with PHI group for 20 H175 helicopters and eight H160s to serve the energy market worldwide. In addition, the H-175 received its CAAC, Chinese Certification Authorities, the CAAC-type certificate in July, enabling deliveries to begin in China. Overall, we still see positive momentum in home countries for both civil and military markets as we continue to progress on some key strategic campaigns. Finally, in defense and space, our third quarter is impacted by charges on our space business, and Thomas will further address it. However, we continue to see a good order momentum across our business, and as of nine months 23, the division had an order intake of 8.5 billion euros, of which 2.4 in the third quarter. It includes the renewal of the contract for the A400M in-service support for Germany, And here I would highlight the recent groundbreaking of the new Airbus A400M maintenance center in Wunstorf. In October, we signed contracts with France valued at 1.2 billion euros for the capability enhancement and for the in-service support of the French MRTT fleet. On IN6, two important tests, the hot firing of the main and upper stages have been successfully achieved recently, another key milestone towards the inaugural flight next year. The priority now is on successfully completing the final test of Ariane 6 and securing its ramp-up to provide the sovereign access to space for Europe. On that note, you may have followed the outcome of the summit which took place earlier this week in Sevilla. European member states have reconfirmed their support to the continued operational phase of IN6, which is an important milestone for the future of our European launches. On FCAS, we are working on phase 1B and progressing according to plan with our partners. And before we move on to the financials, let me give you a quick update on the transformation of Airbus Defence and Space. Recent geopolitical conflicts have actually reinforced the need for innovative defense and space and cyber capabilities. Meanwhile, the execution of programs is more and more challenging, technically, financially, and also sometimes politically. To face this situation, to improve our position in defense and space and our competitiveness and meet requirements, we launched a transformation program aiming to adapt our ways of working, focusing on rigorous program execution from bidding to delivery, including a reinforced risk assessment and mitigation commensurate with the nature of the programs and the changed environment. Aiming to reinforcing end-to-end business ownership and fostering entrepreneurial culture and improve competitiveness, as I said, via numerous measures, some of which are already delivering some efficiency gains. We aim to implement in early 2024 a simplified organizational structure with three fully empowered and accountable business lines, air power, combining our existing military air system and FCAS activities, space systems, and connected intelligence, and supported by a strong transversal operational function. The consultation process with our social partners is ongoing for this change of organization. Obviously, it will take some time for all the initiatives to deliver their full potential that is necessary to achieve our strategic and financial ambitions for the division. And now I turn to you, Thomas. Thomas will take you through our financials.

Well, thank you, Guillaume, and very warm welcome also from my side to everybody on the call. It's my pleasure to speak to you for the first time in my capacity as the Airbus CFO, and I'm very much looking forward to meeting as many of you as I can over the next coming months. And I'm, of course, also delighted to join Guillaume and the rest of the management team to actively contribute to the continued success of Airbus. Now, I'll walk you through our nine-month financial performance in a little bit more detail. As you can see, our nine months 2023 revenues increased to 42.6 billion euros, up 12% year on year, and that is mainly reflecting the higher number of commercial aircraft deliveries. If you look at the EBIT adjusted, before we're looking at the 2023 number, let me start by recalling that the nine months 2022 stood at 3.5 billion euros, and included a net 0.3 billion positive impact from non-recurring elements, which were related to retirement obligations and to international sanctions against Russia. Now, our nine-month 2023 EBIT adjusted slightly increased to 3.6 billion euros, reflecting the higher commercial aircraft deliveries and a more favorable hedge rate versus the nine months of last year, partly offset by investments for preparing the future. As Guillaume mentioned earlier, we recorded charges in certain of our satellite development programs, mostly in the third quarter of this year. And these charges of 0.4 billion euros are the result of an update of our estimates at completion. And it accounts for revised timelines and cost estimates, as well as for the reassessment of commercial risks and opportunities leading to these updated financial estimates on some major long-term contracts. We have therefore today a better assessment of the risks in these programs than we had before. And as a reminder, in 2023, we made further progress on our compliance related topics, which allowed us to release provisions for an amount of 0.1 billion euros in the first half of the year. On R&D, our expenses in the first nine months of this year stood at 2.2 billion euros versus 2.0 billion in the nine months of last year. and we continue to expect our full-year R&D to slightly increase compared to 2022. As you can see, our nine-month EPS adjusted stood at €3.59, based on an average number of 789 million shares, and our nine-month free cash flow before M&A and customer financing was €1 billion, mainly reflecting the back-loaded delivery profile in Airbus Commercial and Helicopters, and the necessary inventory build-up as we execute our ramp-up. Now turning to page 7 of the presentation regarding our profitability, our 9-month 2023 EBIT reported was 2.7 billion euros and the level of EBIT adjustments totaled a net negative of 0.9 billion euros including minus 806 million negative impact from FX mismatch and balance sheet revaluation that is mainly reflecting the mechanical impact coming from the difference between transaction date and delivery date of which negative or minus 155 million were recorded in Q3. It also includes minus 57 million related to the aerostructures transformation of which minus 23 million in Q3 And thirdly, it includes minus 56 million of other costs, including compliance costs of which minus 10 million were recorded in the third quarter. The EPS reported includes positive 231 million of financial results, and that mainly reflects a positive impact from the devaluation of certain equity investments and also the evolution of the US dollar, partly offset by negative impact coming from the devaluation of financial instruments. The tax rate of the core business continues to be around 27%. However, the effective tax rate is 25%, including the tax effect on the revaluation of certain equity investments and a net deferred tax assets impairment. Finally, the resulting net income is 2.3 billion euros with earnings per share reported of 2 euros and 96 cents per share. Now let's move to the next page, page eight, and look at the US dollar exposure coverage. In the nine months of 2023, $15.2 billion of forwards matured with associated EBIT impact and euro conversions were also realized at a blended rate of $1.20 versus $1.22 in the nine months of 2022. And in the first nine months of this year, we also implemented $8.7 billion of new coverage at a blended rate of $1.11. As a result, our total US dollar coverage portfolio in US dollars stands at 87.5 billion with an average blended rate of $1.23 as compared to $93.9 billion at 1.24 at the end of 2022. Now with that, let's have a more detailed look at the free cash flow on page nine. Our free cash flow before M&A and customer financing was one billion in the first nine months of this year. This reflects on the one hand, the level of deliveries and on the other hand, the mechanical inventory build up supporting our Q4 deliveries, both on commercial aircraft and helicopters, as well as the execution of our ramp up. This was partially compensated by a favorable timing of receipts and payments, notably the healthy TDP inflows from orders placed at Le Bourget. The A400M continued to weigh on our free cash flow before M&A, and the nine-month 2023 capex was around negative 1.7 billion versus minus 1.3 billion in the nine months of last year. Looking forward, we expect our capex to slightly increase in 2023, supporting our industrial ramp-up. Now, the free cash flow of 0.7 billion includes M&A activities for 58 million euros and customer financing of 261 million. Overall, however, we can say that the aircraft financing environment remains solid with sufficient liquidity in financial markets for our products. And in the first nine months of this year, the customer financing cash outflow was mostly related to the planned execution of certain contractual obligations. And we might see additional usage of cash going forward in that respect. Now, in total, our net cash position stood at 8.3 billion as of the end of September, and our liquidity remains above 30 billion euros. And with that, I would like to hand it back to Guillaume.