Airbus D&S earns historic €1bn EBIT

Yesterday it was Thales’s 2015 results, today it’s the Airbus Group’s which “achieved a solid performance,” last year, according to CEO Tom Enders. He said the Group was entering 2016 “with confidence”. It earned revenues of €64bn in 2015, up from €61bn in 2014, of which 20% was earned by the Defence & Space (D&S) division, the one we will spotlight as it is of greatest relevance to this blog.

The A400M qualified last November for take-off and landing on grass-strips

The A400M qualified last November for take-off and landing on grass-strips

Enders noted the D&S division had reached earnings before interest and tax (EBIT) of “above €1bn for the first time” and was “now above an 8% margin of return on sales”, in other words, the net profit as a percentage of sales revenue.

Marwan Lahoud, the Group’s chief strategy and marketing officer, said with satisfaction that orders for the D&S division had risen 18.1% to €14.4m from €12.22m in 2014, thanks largely to a “strong momentum” in military aircraft. This sector accounted for 41% of D&S’s income, the rest split unevenly between sales of communications and information systems (20%), electronics (10%), and space (29%).

The sale of platforms (aircraft, helicopters, etc.) accounted for 74% of the €14.4m, the remaining 28% being earned by services.

Airbus sold 14 A330 MRTTs (Multi Role Tanker Transport) in 2015: eight to France, four to South Korea and two to Australia.

The other large transport aircraft in the Airbus catalogue, the A400M, was described by Enders as “still a programme that is troubled in various ways.” Enders said he was “not satisfied with [the] level of deliveries”, which is still slow because of “upgrading of [the aircraft’s] military capabilities” and warned that the ramp-up in numbers of aircraft delivered “must come through stronger in 2016.” He forecast “there will be 20+ deliveries” of the A400M in 2016.

Meanwhile the aircraft continues with its testing programme. It was qualified last November, for example, by the CQC, (the military certification & qualification body of OCCAR – a European organisation for the through life management of cooperative defence equipment programmes) for grass runways after a series of tests at Écury-sur-Coole in France which examined the aircraft’s behaviour on a 1,500m long grass strip. These tests followed earlier successful results on the gravel surface at Ablitas in Spain and will be followed by tests on sand surfaces this year.

Airbus Helicopters earned 10% of the overall revenues of the Group. The business in this division is shared 50/50 between civilian and defence markets.

The Group has decided not to sell its border security business for the moment although Lahoud said “it is still for sale but later” because two major projects for Middle Eastern customers are still on-going. These clearly need to be completed before the border security business can be sold.

Lahoud also noted that Airbus D&S was still interested in upping its current 37.5% share in European missile manufacturer MBDA. It first mentioned an interest in buying all or part of Finmeccanica’s 25% share last year but so far nothing has happened. BAE Systems holds the remaining 37.5% share. “If one MBDA shareholder wanted to reduce we would be interested in acquiring,” he said, adding that “if Finmeccanica wants to sell, we may be interested.