EADS 2004 EBIT* forecast around 20 percent higher than 2003

EADS (stock exchange symbol: EAD), the world’s second largest aerospace and defence group, expects an increase of its operating results in the year 2004. Ahead of the commercial aviation market upturn expected in 2005, EADS targets around 20 percent EBIT* (Earnings before interest and taxes, pre-goodwill amortization and exceptionals) growth in 2004 over the 2003 guidance.

The EADS CEOs Philippe Camus and Rainer Hertrich said: “The airline industry is slowly recovering and is still under pressure. We have assigned ourselves realistic targets for 2004, consistent with our emphasis on financial dependability. These targets are a milestone on the road to double digit EBIT* margins in the medium-term, and they support our solid financial position.”

“Diligence is imperative,” the CEOs continued. “We have reviewed the current Space restructuring plan, and it is fully on track; we have also audited our Airbus order book and are continuing to carefully manage the growth of our defence business.”

EADS also confirms its full-year 2003 targets. It anticipates 2003 EBIT* in the same range as 2002, at the level of € 1.4 billion, and full-year revenues in a similar range as 2002. Full-year 2003 results will be released on 8 March, 2004.

For 2004, EADS targets generally stable revenues of around € 29 - 30 billion, for the fourth straight year in this general downturn of the industry. Defence business growth is expected to offset the decline of Airbus revenues attributable to the combination of the US currency weakness and slightly lower deliveries.

The 2004 revenues target is based on the assumption of a weaker US$ than in 2003 (1€ = $1.20, compared to 1€ = $1.10) for the calculation of the portion of revenues that is naturally hedged by US$ denominated purchasing (amounting to about one third of overall EADS revenues).

Following a careful assessment of its order book, Airbus targets close to 300 aircraft deliveries in 2004. A conservative management of delivery slots gives EADS flexibility to face unexpected events and to apply customer financing restraint.

Space Division revenues should be stable in 2004, supported by a robust order book (including 10 civil telecom satellites). Major programmes such as the £ 2.5 billion Paradigm contract (Skynet5 secure communication services for the UK MOD) and opportunities such as the design, delivery and operation of Galileo (European satellite navigation system) should fuel medium-term growth.

The ramp up of defence programmes in the other Divisions (Military Transport Aircraft, Aeronautics, Defence and Security Systems) will prompt revenues growth: The strongest drivers of growth in 2004 are the A400M, the Tiger and NH90 helicopters and missile programmes.

The slight decline of Airbus deliveries and the continuing A380 R&D effort will hamper 2004 EBIT*.

The recovery of the Space Division is the main source of increased profitability. The dramatic restructuring plan currently under implementation and a number of organizational improvements are the main drivers of the expected swing to breakeven EBIT* of this Division in 2004.

The successful delivery ramp up of missile programmes, Eurofighter, military helicopters and the acceleration of the A400M development revenues will contribute to the growth of EBIT*. At the same time, following the high level of defence contract acquisition, management will direct its focus to the execution of these large programmes and to the performance of the overall defence business.

The EADS management will continuously strive to offset the cash outlays from the A380 investment and the Skynet 5 construction by ongoing cash preservation initiatives.

In line with its restrictive policy for the use of customer financing, Airbus should not increase customer financing gross exposure by more than $ 900 million thus preserving the soundness of the EADS balance sheet.

* EADS uses EBIT pre-goodwill amortisation and exceptionals as a key indicator of its economic performance. The term “exceptionals” refers to income or expenses of a non-recurring nature, such as amortisation expenses of fair value adjustments relating to the EADS merger, the formation of Airbus S.A.S. and the formation of MBDA, and impairment losses. It does not correspond to the definition of extraordinary items under IFRS.

In 2003, EADS continued its dynamic growth in the international defence business:

Despite the difficult market environment, Airbus was awarded major contracts:

In the Space business, EADS also achieved important commercial successes:

EADS is the second largest aerospace and defence company in the world with revenues of € 29.9 billion in the year 2002 and a workforce of more than 100,000. It is a systems integrator and as such is one of the few companies worldwide capable of combining various products and technologies to form complete systems and offering the associated services. The EADS Group includes the aircraft manufacturer Airbus, the world's largest helicopter supplier Eurocopter and the joint venture MBDA, the second largest missile producer in the global market. EADS is the major partner in the Eurofighter consortium, is the prime contractor for the Ariane launcher, develops the A400M military transport aircraft and is the largest industrial partner for the European satellite navigation system Galileo. EADS has over 70 sites in France, Germany, Great Britain and Spain and is active in many regions worldwide, amongst them America, Russia and Asia.

European Aeronautic Defence and Space Company EADS N.V.
Le Carré · Beechavenue 130-132 · 1119 PR Schiphol Rijk · The Netherlands

EADS Deutschland GmbH · 81663 Munich · Germany
EADS France S.A.S. · 37, boulevard de Montmorency · 75781 Paris Cedex 16 · France
EADS CASA · Ava. de Aragón, 404, 28022 Madrid · Spain