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Research Tree provides access to ongoing research coverage, media content and regulatory news on AIRBUS GROUP SE. We currently have 9 research reports from 2 professional analysts.
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AIRBUS GROUP SE
AIRBUS GROUP SE
Flight path maintained
23 Feb 17
Airbus delivered another robust performance in 2016, with Q4 results exceeding market expectations. The addition of a further provision of €1.2bn (FY16 total €2.2bn) for the troubled A400M military transport aircraft remains a burden on cash in 2017 and 2018. However, even allowing for this, it would appear that both underlying earnings and group FCF are set to start improving from this year, and likely accelerate as the civil aircraft ramp-ups deliver expected learning curve benefits with improved pricing.
Not so grateful to the A400M programme !
22 Feb 17
After the strong operating performance in December 2016 and 111 aircraft delivered during that month (a new record), Airbus reported today rather weak FY results, mainly impacted by high one-off charges among which €2.2bn for the A400M programme. Adjusted figures show quite a flat EBIT in all divisions except for that of Helicopters which was negatively impacted in terms of both revenues and the EBIT margin compared to FY2015. Also, despite the decrease in both adjusted and reported EPS, the dividend per share will be increased to 105% of reported EPS in order to maintain the payout ratio at 40%. Expecting growth in deliveries and EBIT, and a flat FCF, Airbus looks confident of the ramp-up of its main programmes but still considers the A400M programme as challenging.
Lesser headwinds than expected and confirmed guidance
26 Oct 16
Airbus reported quite weak results in a quarter that is usually one of the smallest of the year. Actually, the top-line stayed stable compared to the previous year’s Q3 with a total revenue decline of 1% to €13.95bn. On the contrary, the company reported a quite weak EBIT before one-offs (bo-o). All three divisions being concerned by this relatively poor performance lead the total EBIT bo-o to decrease by 21% to €731m. This re-inforces the EBIT decrease this year because it was already down 11% in H1 compared to the previous year. The FY guidance appears at risk with this set of results, but the company has still maintained it.
A400M uncertainty lifted... but no financial improvement until Q4
29 Jul 16
Headline H1 figures: Airbus posted flat H1 revenues at €29bn, while EBIT before one-offs fell 11% to €1,684m from €1,883m. Reported EBIT was €172m higher at €1.86bn, impacted by a long list of one-offs, both positives and negatives. On the negative front, both the A400M and A350 programmes recognised negative charges to the tune of €1.026bn and €385m respectively. In addition, PDP and the balance sheet revaluation were negatively impacted by the dollar strengthening for -€509m. These negative items were, however, more than outweighed by the capital gain of €1,139m following the creation of the ASl 50/50 JV with Safran, the full disposal of the Dassault shares and other capital gains of €85m. Before one-offs, EPS came in at €1.41, just below €1.47 in H1 15 despite the 1.5% accretion from the share buy-back programme. On a reported basis, however, H1 16 EPS stood at 2.27. FCF generation was a negative €3bn, mainly due to the heavy H2 aircraft delivery profile at Airbus commercial but also almost certainly from the lack of deliveries of the A400 (just two in Q1 despite the original target of 20 for 2016).
Good and bad news to be delivered in H2
28 Apr 16
Headline figures: Airbus posted flat Q1 revenues at €12.18bn, up 1%, while EBIT before one-offs fell 23% to €501m from €651m. Reported EBIT was €136m lower, impacted by PDP mismatches/balance revaluations at Airbus commercial. FCF generation was a negative €3bn mainly due to the heavily H2 aircraft delivery profile at Airbus commercial but also almost certainly from the lack of deliveries of A400 (just two in Q1 despite the original target of 20 for 2016). Divisional standpoint: Airbus commercial saw a slow start to the year in terms of orders with 10 net orders (32 gross, 22 cancellations including 14 conversions from A320 Ceo to Neo), however the order intake is hardly ever linear. The underlying market remains robust with a very low level of deferrals; in fact customers are looking for earlier delivery slots if possible. Looking at revenues, Airbus commercial benefited from the stronger dollar, up 1.2% to €8.7bn despite lower deliveries over Q1 versus Q1 15. EBIT came in at €407m down 28.5% from Q1 15 despite a significant €168m decrease in R&D. The fall in margin to 4.7% from 6.6% is explained by the fall in volume of deliveries of A320s and A330s during Q1. A pricing impact on A330s during the transition phase to A330neos as well as the lack of pricing benefit from the undelivered A320neos. The dilution impact from the increase in A350 support costs is also a factor (200bp dilution impact on EBIT margin in 2016). The reduced R&D and the small FX tailwind have failed to compensate these factors in H1. Looking at the individual programmes: The A320ceo deliveries are unharmed but the pricing is certainly not as favourable as that of the A320neo. In 2016, Airbus expects the mix of A320 deliveries to be roughly 20/80 in favour of the ceo meaning that the pricing uptick will certainly have more of an effect in 2017. The backlog of A320neos sitting on the tarmac is expected to fall starting this summer as they are awaiting their new engines from Pratt & Whitney which has guaranteed that the fixes (hardware and software) will lead to deliveries in the summer. The CFM-engined test aircraft are going through certification but with a less innovative design, teething issues are not expected to be important. The A330 programme has ramped down to the 6/month rate announced and the pricing on these aircraft is certainly not as favourable as in the past, however Airbus will see some volume uptick in 2017 as the rate will increase again to 7/month before the transition to the A330neo in 2018. The A350 ramp-up is going well despite supply chain issues remaining challenging. The cabin interior issues (Zodiac among others) have apparently stabilised, allowing Airbus to maintain its 50+ delivery target for 2016. Airbus indicated that the focus is very much on reducing rework-associated costs and recurring costs but that support costs are increasing through the ramp-up as expected. The target for a rate of 10/month in 2018 is confirmed. The A380 programme is certainly a smooth one on an industrial basis with Airbus confirming that it would maintain the breakeven level on the programme in 2016 and that it was currently targeting 20-25 deliveries in 2017 while working to reduce the breakeven level to closer to 20 aircraft. Airbus Helicopters has seen a significant change in its mix/volume of deliveries with the weakened civil market being partially compensated by the growing defence deliveries but at a structurally lower margin. Revenues fell 10% to €1.15bn and EBIT by 36% to €33m (€52m in 2015, 2.8% EBIT margin vs. 4% in 2015) despite restructuring efforts. Airbus Defence & Space is seeing its portfolio adjustments payoff with the disposal to KKR of its defence electronmics signed and the JV with Safran on the launcher business set to be finalised in the coming months. Airbus should see a cash inflow from Safran of c. €800m once the JV is finalised. Revenues fell by 2.7% during the quarter to €2.53bn, however EBIT grew 21% to €109m (EBIT margin of 4.3%) as the greater focus of the portfolio in addition to the restructuring are paying off. The order from Kuwait for Eurofighter was certainly a highlight over the quarter. The big disappointment comes from the A400M programme which again made the headlines for gearbox issues. The gearbox is produced by AVIO (owned by GE) and, as a result of waiting for a fix, Airbus has only been able to deliver two aircraft while 20 deliveries were originally planned for 2016. The comments on the conference call highlight the uncertainty concerning the fix and the financial impacts. These are yet to be determined, however Airbus’s CFO suggested that the “impact on financial statements could be significant” but later admitting that the burden could be spread between the stakeholders of the programme. In addition, production would be stopped in order to avoid inventory build-up if a fix cannot be rapidly implemented. Management suggests that “cancellation risks from customers are remote”.
N+1 Singer - T. Clarke - Strong conclusion to FY16, record order book
28 Mar 17
After significant upgrades at the time of the full year update (PBT forecast +43% FY16; +14% FY17), today’s results are c.4% ahead of our expectations at the PBT level and show strong growth on the prior year (PBT +48%). All regions achieved positive growth in revenue. The outlook statement refers to a still growing order book (£350m at the end of February vs. £330m at the year end) and the strength of recent trading, with London & the South East and Scotland said to be particularly positive. The Group has reiterated its ambitions to improve margins, but we have not incorporated this into our forecasts at this stage. We have nudged up our FY’17 forecasts (PBT +5%) and introduced FY’18 forecasts that imply 2% PBT growth. Despite the well justified bounce in the share price, the shares still trade at a significant discount to the peer group (7.6x FY17 PE, 4% yield).
Panmure Morning Note 29-03-2017
29 Mar 17
We are cutting our recommendation to HOLD as we see little upside from current levels given the lack of positive surprises in today’s trading update. Multiples of 4.4x 2017 sales and 17x 2017 EBITDA imply an expectation of at least slightly exceeding expectations. We had assumed that acquisitions will provide the momentum until organic investments deliver. However, acquisitions are proving elusive and excess cash is diluting returns. Moreover, our forecast relies on at least one order in vehicle simulator market, which has yet to be announced. The management has shown that it can use the financial markets to raise equity but it now needs to show that it can deploy excess equity productively.
N+1 Singer - Severfield - Strong H2 drives upgrades; CEO temporarily steps down due to ill health
28 Mar 17
Severfield’s trading update highlights that trading during H2 was strong and the Group now expects results to be ahead of expectations. Cash flow performance has been similarly strong with net funds at the year end also expected to be ahead of expectations. The strong performance was driven by both a better than expected revenue performance and better than expected growth in the operating margin. We expect to increase our FY16 PBT forecasts by c.9% to around £19.5m. In addition, we are disappointed to see that Ian Lawson (CEO) has taken a temporary leave of absence due to physical ill health. John Dodds (non-executive Chairman) will step up to Executive Chairman on an interim basis and Alan Dunsmore (FD) has agreed to assume the role of CEO on a similar basis. This should ensure the continuity of the business whilst Ian is recovering. The outlook for Sevefield remains positive and the Group has reiterated its medium term target to double PBT from £13.2m in FY16 by FY20. We remain positive on Severfield (one of our best ideas for 2017) and continue to see clear potential for it to outperform its medium term targets.
28 Mar 17
ClearStar* (CLSU): Building a background for growth (CORP) | Sound Energy (SOU): TE-8 results (HOLD) | LiDCO* (LID): 2017 should be a transformative year (CORP) | Proteome Sciences* (PRM): FY 2016 in line. Moving towards breakeven (CORP) | Fulcrum (FCRM): Significant market potential, rising margins and a strong balance sheet (BUY) | Mortgage Advice Bureau (MAB1): Strong and growing intellectual property (BUY) | 7digital* (7DIG): Open offer result (CORP)