 |
 |
Statement from the Chief Executive Officers
Left: Rainer Hertrich
Right: Philippe Camus
Left: Rainer Hertrich
Right: Philippe Camus
|
|
Dear employees, customers, shareholders and suppliers,
EADS has been in existence for five years now, and we are
proud to present the Company we have had the pleasure and
honour to guide from its creation in July 2000 to the strong
position it is in today.
EADS is often cited as the model integrated European company, with a singular spirit and efficient structure. We are very pleased with the way vision has become reality. We believe that we have been able to achieve this because we, personally, have worked together in mutual confidence and transparency, bound by a common sense of mission and duty to the Group, its employees and shareholders. We are proud that EADS is now recognised by all its stakeholders as an industrial, technological, social and financial success.
Five years ago, at EADS' inception, we inherited a collection of impressive defence, space and aeronautics businesses. These diverse national assets, though promising, were far from being a unified company, with the efficiency needed to become a leader in global markets.
Airbus was a European joint venture with no industrial assets, and no guiding strategy. The new EADS was a powerful driving force in the formation of the Airbus company, and it enabled Airbus to launch the A380, which is set to become the benchmark for airline technology in the 21st century.
In space and defence, issues related to national interests and cultures made the realisation of synergies and the creation of an effective industrial group even more challenging. The willingness of European governments to design common defence and space policies had made great progress, but was not yet fully developed. The fantastic motivation of EADS people and the trans-national spirit of our management have overcome this resistance. We have transformed national organisations into integrated businesses which transcend Europe's historical boundaries.
Despite the difficulties, this has been achieved incredibly quickly in such areas as missiles and satellites. In 2001 we created MBDA (37.5% owned by EADS) with our fellow shareholders. MBDA is now the global leader in missile systems, and LFK, the German missile manufacturer, is poised to merge with it. In the space sector, we established Astrium in 2000 as the leading European satellite company.
 |
|
;){kind=small} |
|
Since the creation of EADS, we have always devoted 6% to 7% of annual revenues to self-financed research and development (R&D) - a far higher percentage than our peers. Taking into account customer-financed R&D, the percentage is roughly doubled. This heavy investment is a prerequisite to ensure future competitiveness.
We have given new means to the Corporate Research Centre, a centralised team of more than 600 people located in Paris, Toulouse, Hamburg, Munich and Moscow. With a single management structure, all EADS R&D activities are coordinated to allow the transfer of knowledge across businesses and to avoid duplication.
We also believe that international cooperation is a key to unlock R&D success and affordability. In 2004, we launched the Advanced Technology Initiative, a global network which fosters innovation in technology, research and development all over the world. Beyond Moscow, we have set up partnerships in Singapore and China for R&D projects.
Among the most notable technological breakthroughs since the creation of EADS, we would like to mention the increasing use of composite materials in our civil aircraft, the development of electronic fly-by-wire controls for aircraft refuelling booms and a hyper-sensitive electronic device that detects explosives.
Our successes of tomorrow will stem from the men and women working for EADS. We have carefully implemented a working environment which is both socially responsible and attracts the most talented individuals. From scratch, we have also created a group-wide Human Resource policy for people management, salary compensation and industrial relations.
This is really cutting-edge because French, German, Spanish and UK social laws are very different, as are the rules for union representation. Before EADS, there was no existing legal framework - so we designed and implemented a structure to fit the need. A few months after the creation of EADS, unions and works councils from France, Germany and the UK established an unprecedented trans-national committee - the European Works Council.
We are proud that EADS is an exemplary employer. It is, according to an independent survey, one of the industrial groups where European engineers most want to work. We have strived for a better balance between men and women. Our personal commitment was to raise the proportion of women to at least 20% of newly recruited engineers. In 2004, we have slightly exceeded this commitment.
In total, EADS has created more than 10,000 new jobs across the countries in which we operate over the past four and a half years.
EADS is also a great financial success. All financial targets have consistently been met or exceeded. In a market environment burdened by terrorism and threats, and also by the global economic slowdown, we have performed better than expected every year.
We have increased the operating margin from 5.8% in 2000 to 7.7% in 2004. EBIT has increased by 75% from €1.4 billion to €2.4 billion, with every division contributing to this outstanding growth. Defence & Security Systems has been the most notable success, increasing its pro forma EBIT more than three-fold since 2000. Space has accomplished a dramatic turnaround. And Airbus, with its completed product range, is benefiting from the start of the market upturn and the favourable currency hedges initiated in the early years of EADS.
EADS' balance sheet is stronger than ever. We have not only maintained our net cash position but boosted it from €3.0 billion at the end of 2000 to €4.1 billion at year end 2004.
Furthermore, EADS is now on an improved growth trajectory. EADS has proved resilient in the downturn. The actions taken during the past few years in terms of both restructuring and industrial integration have left EADS extremely well positioned to benefit from the market upturn.
We leave EADS with an outstanding order book of €184 billion. Most particularly, our defence programmes have supported this, with their order book growing from around €15 billion at the end of 2000 to €49 billion at year end 2004.
The financial strength of EADS, its potential for growth and the transparency of our financial communications have earned EADS broad recognition in financial markets. The EADS share price has increased by +22% between inception and 31st December 2004. In the same period, the CAC40 Index has lost -41%.
In summary, we are very grateful to all the people who work for EADS or who have placed their confidence in EADS by investing in our shares, selling to us, or purchasing from us. Without them these industrial, technological, social and financial successes would not have been possible.
As we look to the future, we believe that EADS should continue to build on the strong foundations established during this initial phase. EADS has gathered a powerful set of attributes: a highly motivated and skilled workforce, a complete and competitive product range, a large and global customer base, a sound financial base and a unique trans-national spirit.
EADS is now on an improved growth trajectory. EADS has proved resilient in the downturn. The actions taken during the past few years in terms of both restructuring and industrial integration have left EADS extremely well positioned to benefit from the market upturn.
 |
