Letter from the Chairmen
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| Left: Manfred Bischoff, Chairman |
| Right: Arnaud Lagardère, Chairman |
Dear EADS shareholders,
We are happy to report that during 2003, EADS substantially strengthened its position in the global aerospace and defence industry.
As this annual report will show, your Group has further strengthened its position as a major player in its main markets, with excellent products, leadership positions in many key sectors, strong partnerships with customers, collaborators and suppliers and an increasingly global reach. We have been able to build further on our assets as a multi-national company, strengthening our areas of activity by continuously expanding beyond our home markets. We note with great interest that EADS seems to serve now as a model of a highly successful cross-national company, in and even outside Europe, with a truly international business portfolio.
The strength of EADS is innovation. Airbus leads the commercial aircraft market and is defining a new standard for passenger aircraft with the A380. In 2003, which was another difficult year for the airline industry, Airbus has successfully managed to become number one in aircraft deliveries – a breakthrough that testifies to the vigour of EADS in commercial aircraft business. In the defence sector we are a leader in many segments and are successfully widening our portfolio with tanker and transport aircraft in addition to our programmes in missiles, satellites, space-systems, and air defence – offering the full spectrum of capabilities.
In 2003 the Board of Directors dedicated much of its time and attention to reviewing and ensuring successful strategy implementation with a focus on expanding into new markets and on widening the product range, for example in ‘system-of-systems’ capabilities. The Board has intensively discussed and examined the situation in those Divisions that have not yet reached their performance objectives and has made the necessary decisions on reorganisation and restructuring required for the achievement of defined profitability targets. Along those lines the new reorganisation of the Defence and Security Systems Division, integrating the Military Aircraft business was approved by the Board with the aim of bundling and focusing our defence activities and bolstering our systems approach.
An important area of focus for the Board of Directors was the competitive situation of EADS in the international aerospace industry. We have looked into different ways of developing and positioning your Group for the future in order to participate proactively in shaping our industry. For the Board this meant both, reviewing the opportunities to develop EADS from within, building on its strong existing capabilities, and verifying possible scenarios for external growth and development of the structure of EADS at the European and transatlantic levels.
Throughout 2003, the Board has closely monitored and reviewed major programmes such as the progress on the Airbus A380, on the A400M transport aircraft and the Aster missile programme. Regarding personnel and human resources issues at EADS, the Board has dealt with management qualification as well as with the need to attract, retain and develop our high-potential employees in order to ensure the future quality of EADS’ management and its multi-national leadership structure. Finally, financial performance and structure, hedging strategy, funding policy and accounting principles were debated and decided among the Board members in a collaborative and trustful way.
Despite the still challenging business environment, the 2003 results of EADS have once again surpassed its targets. With an EBIT of €1.54 billion, an impressive order book (which grew substantially last year), and a significant net cash position, the Group has shown that EADS’ strategy and its careful execution are on track, resulting in increased financial strength and profitability.
 A400M |
The year 2003 was also in many respects a significant one for the Group’s shareholders. Our share price clearly outperformed major indices to close at €18.85 on 31st December 2003; a 91% increase compared to December 2002. This made us the second-best performer in the CAC 40 and one of the strongest performers in the world aerospace and defence sector. In view of the Group’s financial strength and excellent prospects, the Board will be recommending payment of a dividend of €0.40 per share, an increase of €0.10 from the previous year.
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We are no less determined to set a standard of excellence in the fields of corporate governance and corporate social responsibility. We are committed to meet and even exceed social, legal and statutory requirements to ensure transparent management and reporting. Given the need and the clear mandate for greater transparency and openness, the Board has reviewed and renewed our set of corporate governance practices in 2003 to comply with corporate governance codes of our European home countries. |
| Furthermore, we fully support management’s undertaking to share examples of best practice across the Group in order to further enhance EADS’ standard in the fields of corporate governance as well as social responsibility. | |
The Board of Directors appreciates that the Management of EADS has succeeded in establishing your company as a credible and reliable enterprise, not only for its customers, suppliers and employees, but in the eyes of the public as well. Our thanks and congratulations are due to everyone in the Group who has contributed to this result, which will be developed and further enhanced for the benefit of all EADS stakeholders, according to the highest standards of corporate governance.
We enter 2004 with a strong financial, commercial and technological base, and with a clear leadership strategy for the future. When the inevitable market upturn comes after years of depressed conditions in world economies, we shall be exceptionally well-positioned to fully benefit from this solid and promising base. This will allow us to continue creating substantial value for our shareholders and furthermore contribute to the well-being of all our stakeholders.
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| Manfred Bischoff Chairman | Arnaud Lagardère Chairman |
