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An outstanding year for the aerospace industry, 2005 has been a record year for EADS. Not only has the Company delivered its best overall performance yet, it also met or even exceeded its financial targets for the sixth consecutive year. We should like to thank everyone who contributed to this success.
2005 results confirm the Company’s growth trajectory. Everybody working at EADS is committed to keeping up this momentum and to realising the Company’s huge potential for the future.
In terms of profitability, EADS has reached new heights. The 2005 EBIT margin reached 8.3%, equalling €2.85 billion. It is worth pointing out that EBIT, net income and net cash have risen considerably more than revenue – which also increased substantially. Furthermore, great, innovative products pave the way for further growth.
A vision comes true – the A380
A whole new era in commercial aviation began when the A380 took to the skies for the first time on 27th April. This was an historic event – witnessed by tens of thousands at Toulouse and watched on TV by millions all around the globe.
What started as a bold engineer’s sketch more than ten years ago will become part of passengers’ and airlines’ reality when this revolutionary aircraft enters into service. Offering comfortable and affordable air travel for the world’s growth regions, the A380 shows what we mean by calling EADS a driver of change in global aerospace.
In fact, this Company is very much characterised by the technological and entrepreneurial quest for that ‘step beyond’. In line with this thinking, we jointly took over the responsibility as CEOs in order to make a great company even greater and to build on the solid foundations laid by our predecessors.
Beginning the new chapter with a clear strategy
In 2005, the Company began a new chapter in its development. Our strategy emphasises four objectives: ensuring that Airbus remains a robust competitor, enhancing the operational and financial performance of our space, defence, and helicopter businesses, expanding our global footprint, and ultimately delivering best-in-class profitability across our businesses.
Last year’s results and initiatives confirm the Company is making good progress towards achieving these strategic objectives.
In 2005, for the third year in a row, Airbus led the industry in terms of units delivered, and for the fifth consecutive year in terms of new orders. Yet competition has stepped up its efforts to recapture lost ground. We will counter this challenge.
Eurocopter, with its strong performance in revenues and earnings, reinforced its position as market leader of the rotary wing sector. Additionally, the Group’s Military Transport Aircraft and Space Divisions showed significant improvement in their financial performances.
We see EADS’ unwavering commitment to its Space business corroborated not only by the successful turnaround already accomplished, but also by the fact that in EADS’ institutional Space business annual growth of 2.5% is already secured up to 2010.
EADS’ highly attractive and exportable platform portfolio with ‘blockbuster’ products such as the A400M, the Eurofighter and the NH90 and Tiger helicopters, as well as various advanced missile systems, is proving to be successful in markets around the globe. The Company is also developing its defence business towards large systems integration, and the provision of complex solutions both in defence and global security. Based on our expertise in PFI (Private Finance Initiative), gained particularly through leading the two largest defence PFIs in the United Kingdom, we plan to make services, supported by innovative financing, a core offering.
The acquisition of Atlas Elektronik, a leading maritime defence electronics company, carried out in partnership with ThyssenKrupp, underlines EADS’ determination to strengthen the Company’s systems capabilities in the naval field. EADS carefully evaluates all options for further acquisitions and consolidation.
EADS strengthens its presence in growth markets
During 2005, the Company made great progress in expanding its global reach. Practically half of all new Airbus orders came from China and India. And China’s air traffic is expected to more than double in the coming five years. EADS is determined to seize the growth opportunities of globalisation.
Accordingly, we have forged several important alliances with US, Chinese, Russian and Korean industrial partners, embarking together on highly promising co-operation and co-development projects, both civil and military.
In the United States, EADS has expanded its industrial footprint and is well positioned for major projects with the Air Force and the Army. NorthropGrumman decided to partner with us for the renewal of the Air Force tanker fleet. In South Korea, Eurocopter was selected as the nation’s primary partner for development of the first local military transport helicopter. With China, two strategic agreements were signed, covering the co-development of a new multi-purpose helicopter, the EC175. EADS will make further inroads into the most promising growth markets in months and years to come.
At the end of 2005, the Company’s order book stood at an unmatched €253.2 billion, reflecting the strong business momentum of EADS’ operational units. Their order intake more than doubled to almost €93 billion. All of this provides us with an excellent foundation for continuing the Company’s unique success story.
The way forward: three major development thrusts
Since our appointment in June, we have concentrated on devising the way forward for EADS, focusing on the Company’s growth perspectives, top and bottom line, in an aerospace and defence industry environment defined by intensifying global competition.
Under the heading of ‘
Triple I’, we have introduced a Group-wide programme providing a comprehensive roadmap towards further growth:
- Making sure through continuous Improvement we benefit fully from our huge order book, raising EADS’ operational performance in terms of cost, quality and on-time delivery. State-of-the-art tools and processes, successful implementation and execution of Improvement projects through all Divisions and corporate functions, and a particular focus on managing the ever-more complex supply chain, will therefore be given highest priority in the years to come.
- Creating new mid-term growth opportunities through Internationalisation, we are set to expand the Company’s footprint in the commercial, security and defence markets with the most dynamic development. EADS plans to be a strong local industrial player in key countries, such as the United States, China, Russia, South Korea and India. Apart from market access, being a corporate citizen in these key countries will allow us globally to recruit the best talent and technology there is. We are convinced that with its European background, this Company is exceptionally well prepared for becoming a truly global industrial Group.
- Finally, through Innovation, we lay the foundations for tomorrow’s growth, shaping the future of our Company and that of the industry. With our initiative to speed up innovation, for example by increasing technology readiness levels, focusing on game-changing technologies and introducing a Chief Technology Officer at Group level, we will ensure that EADS maintains the innovative edge that differentiates our products in the competitive landscape.
Stepping forward together
While striving to become stronger, EADS never forgets its responsibility for those in need. Both during the tsunami catastrophe in South East Asia and when hurricane Katrina hit the southern United States, EADS sent mobile hospitals, helicopters and transport aircraft to the affected areas. On both occasions, EADS employees showed great commitment and generosity, and we want to thank them for their support.
We have set the Group ambitious targets and defined a clear roadmap that we believe will ensure EADS’ success in years to come. Looking back at an outstanding 2005, the Company is assertively preparing its future. It will be a demanding journey, but one that we embark on with confidence.
 Thomas Enders |
 Noël Forgeard |
