H1 2003 Results

Rainer Hertrich, CEOHans Peter Ring, CFO

Press conference – July 28, 2003 - London

22Safe Harbor Statement
Certain of the statements contained in this document are not historical facts but rather are statements of future expectations and otherforward-looking statements that are based on management‘s beliefs. These statements reflect the Company‘s views and assumptions
as of the date of the statements and involve known and unknown risk and uncertainties that could cause actual results, performance orevents to differ materially from those expressed or implied in such statements.
When used in this document, words such as “anticipate ”, “believe ”, “estimate ”, “expect ”, “may ”, “intend ”, “plan to ” and “project ” areintended to identify forward-looking statements. Such forward-looking statements include, without limitation, projections forimprovements in process and operations, new business opportunities, revenues and revenues growth, operating margin growth, cash
flow, deliveries, launches, compliance with delivery schedules, performance against Company targets, new products, current andfuture markets for the Company products and other trend projections.
This forward looking information is based upon a number of assumptions including without limitation:·Assumption regarding demand·Current and future markets for the Company‘s products and services·
Internal performance including the ability to successfully integrate EADS‘ activities to control costs and maintain quality·
Customer financing·
Customer, supplier and subcontractor performance or contract negotiations·
Favourable outcomes of certain pending sales campaigns
Forward looking statements are subject to uncertainty and actual future results and trends may differ materially depending on varietyof factors including without limitation:·
General economic and labour conditions, including in particular economic conditions in Europe and North America,·Legal, financial and governmental risk related to international transactions·
The Cyclical nature of some of the Company‘s businesses·
Volatility of the market for certain products and services·
Product performance risks·
Collective bargaining labour disputes·
Factors that result in significant and prolonged disruption to air travel world-wide·
The outcome of political and legal processes, including uncertainty regarding government funding of certain programs·Consolidation among competitors in the aerospace industry·
The cost of developing, and the commercial success of new products·
Exchange rate and interest rate spread fluctuations between the Euro and the U.S. dollar and other currencies·
Legal proceeding and other economic, political and technological risk and uncertainties
Additional information regarding these factors is contained in the Company‘s “document de référence ” dated 2nd April 2003.
The Company disclaims any intention or obligation to update these forward-looking statements. Consequently the Company is not
responsible for any consequencies from using any of the above statements.

33

EADS at home in the UK market· FY 2002 revenues in UK : € 2.5 bn

the 3rd largest EADS market· € 17.3 bn order book at June 2003
· Over €3.1 bn spent with UK

suppliers in 2002 (12.3% of total)· 13,000 employees at June 2003

(12.1% of total)· € 1.1 bn recently invested in UK

Airbus plants (Broughton, Filton)
44

EADS Growing in the UK· Fast growth secured by existing firm orderbook– MBDA: Meteor, Storm Shadow– A400M (€ 2.5 bn UK share)– EasyJet order : 120 A319

· Winning key programmes, competing for future orders– Prime Contractor capability: Skynet 5– System integrator: GBAD
– AirTanker (FSTA)

55

Content

1.

Group overview

2.

Operating performance by division

3.

Financials

66

EADS has Laid Solid Groundwork for Tomorrow
Airbus:- 199 gross orders = 66 % market share (net order value)- 129 firm orders and commitments for A380
- order-book: 1531 commercial ac- 2003 target of 300 deliveries on-track (149 delivered)

Defence:- A400M €20bn contract signed- Eurofighter formal acceptance by domestic customers

Space:- Restructuring under-way- Prime contractorship awarded and € 3bn launcher
commitment from Arianespace
Defence…withrebalancing oforderbook
towards defence

Space andothercommercial

1.3

years

Commercial
aviation

5.1

6.9
years

years

June 2003 Orderbook

times 2002 revenues, except for Airbus (deliveries)

77

EADS Pursues Further Growth Opportunities
Airbus:- On-going campaigns for civil customers

Defence:- FSTA UK MoD bid offer- A400M export opportunities- EADS short-listed by UK MoD for GBAD System- Preferred bidder for Herkules in Germany- Deepwater further orders expected- Eurofighter: Domestic tranche 2, Austria, On-going
export campaigns

Space:- Paradigm UK: syndication successfully under-way…
… and similar opportunities sought in other countries- Go-ahead for Galileo - 1st step €1.1bn (EADS: 38%)88

H1 2003 EBIT:
Defence businesses improvement partly
offsets Airbus and Space decrease•

Airbus affected by R&D and volume on H1 … expected
to catch up over the year with better mix•

Space losses heavier in H1 2003 and restructuring willcontinue to weigh more on FY2003•Defence and para-public businesses post typicallyhigher results on H2•Continuing program ramp-up at Defence and Security
Systems will drive FY2003 EBIT improvement over 2002

On-track for FY2003 targets99

H1 2003 Financial Highlights
in m€

H1 2003

H1 2002

Revenues
EBIT*

13,060 € m
592 € m13,974 € m
775 € mFCF before cust. financing**
New orders

in bn€Net Cash position
Total Order bookof which Defence***305 € m

221 € m43,190 € m

14,791 € m

June2003

December2002

0.9 € bn
187.7 € bn41.6 € bn

1.2 € bn
168.3 € bn
22.0 € bn

pre goodwill and exceptionals
excl. investments in medium term securities and consolidation changes

1010

Content

1.

Group Overview

2.

Operating Performance by Division

3.

Financials

1111

Airbus€m

H1 2003 H1 2002

Deliveries

149

160

Revenues

8,773

9,870

• Stable EBIT pre-R&D at €1.5
bn despite lower deliveries

R&D self-financed
901
680 • Revenues impacted by
in % of revenues
10.3%
6.9%
weaker $ and lower deliveries(Revenuerecognition based on 146
EBIT*621874a/c),
partlyoffset by better mix
in % of revenues
7.1%
8.9%
Order book154,428** 145,500 § EBIT mostly impacted by R&D
in units
1,531
1,519
increase and Aircelle disposal* pre goodwill and exceptionals** Orderbook = 1531 commercial ac + workshare on 180 A400M• Ongoing commercial success- Workshare on A400M: € 14 bn- 199 new civil orders in H1:
Jetblue, China, Emirates, …
- Malaysia and Korean Air commit
to A380- Qatar Airways intents to buy 32
Airbus a/c

gain on H1 2002 (€ 63 m)§ Order-book surges 16% withconstant $ ($ impact of about €(15) bn from June 02)1212

Customer Financing Exposure Under Control
all figures in € mFigures for 100% Airbus

June 2003

Dec. 2002

1.14

1.05

3,511811(2,022)
1,489(1,489)
0

3,581
891
(2,062)
1,519(1,519)0closing rate $/€Total Gross exposure*of which off-balance sheet
Estimate value of collateralNet exposure
Provision
AIRBUS Net exposure after provision* Adjusted for stipulated loss values

Airbus gross customer financing development on H1 2003 in $ mAmortization(94)

501Additions3,791
Dec. 2002

Disposal(119)4,079June 2003

1313

MTA
H1 2003 H1 2002

€mRevenues

268

234

R&D self-financed
11
in % of revenues
4.1%EBIT*(8)in % of revenues
Order book
20,476229.4%(72) **• A400M revenues expected
to start from Q3 2003

• Revenue growth driven
by military derivatives• EBIT improvement
1,283* pre goodwill and exceptionals** H1 2002 had included € 54 m charge due to Fairchild Dornier insolvency

expected on second half
due to seasonality andA400M ramp up• Order intake:92%defence§ A400M € 20 bn§ US Coast Guard 1st batch€ 63 m (2 CASA CN-235)

based on H1 2003 revenues

1414

Aeronautics(new format : excl. Military aircraft)

H1 2002 • Military Aircraft BU€mH1 2003 Pro-forma

Revenues
R&D self-financed
in % of revenues
EBIT*in % of revenues
Order book

1,613

1,606

34
2.1%

52
3.2%

593.7%

291.8%

9,828

10,336* pre goodwill and exceptionals

64%
civil

36%
defence

Sogerma 5% EFW
5% Socata
18%
ATR

7%

Eurocopter
65%
based on H1 2003 revenues(Eurofighter, Tornado,…
businesses) transferred to DS(Defence and SecuritySystems)• Eurocopter: Preparation ofTiger deliveries• EBIT improvement driven byEurocopter• H1 EBIT and Revenues
traditionally lower than H2
due to defence and parapublic customers
1515Space• Revenues nearly stable
H1 2003 H1 2002 excluding Astrium€mconsolidation change
Revenues
1,008882 • Restructuring under-way;
R&D self-financed
27
24
target EBIT breakeven in 04
in % of revenues
2.7%
2.7%
• EBIT line hit :EBIT*(131)(85)• first-time consolidation of
100% Astrium € -30m
Order book
4,248
3,492
• Restructuring and contract* pre goodwill and exceptionals
provision : € 124 m• Strong order-book includes
7 telecom satellites
Space transportation• Ariane : MOU for 30
defence44%
launchers worth € 3 bn; first
25%
75%
batch of 10 launchers
56%
civil
Astrium satellites
expected in H2 2003

(Astrium 100% consolidated from January 2003)(100% consolidated)based on H1 2003 revenues

1616

Defence and Security Systems(New format : incl. Military Aircraft)

H1 2002 • DS new organisation€m

H1 2003 Pro-forma

Revenues
1,902
R&D self-financed
103
in % of revenues
5.4%
EBIT*(28)Order book
13,342

1,856
99
5.3%
(37)
12,944* pre goodwill and exceptionals

Services5%
Defence
34% 11% Electronics

Military a/c
15%85%
defenceDef. & 22% 28%
comm.
Missilessystemsbased on H1 2003 revenues• EADS Telecom 100% held
since July
• H1 2003 EBIT incl. €17m
restructuring charge• Eurofighter: acceptance bycustomers; deliveries on-trackfor 12 units in FY2003;• Revenues: Missiles strong
growth partly offset by Telecom
decline• Seasonality : higher H2• Q2 2003 EBIT €+26m much
improved from Q2 2002 EBIT:
€+17m

1717

Content

1.

Group overview

2.

Operating performance by division

3.

Financials

1818

Profit & Loss Highlights
H1 2003€mRevenues
self-financed R&D
EBITDA*EBIT*
EBIT* before R&D

in % of
Revenues

13,060H1 2002€m

in % of
Revenues

13,974

1,076
1,292
592
1,668

8.2%
9.9%
4.5%
12.8%

876
1,501
775
1,651

6.3%
10.7%
5.5%
11.8%

Interest result
Taxes

(101)
(151)

(0.8%)(1.2%)(58)(229)(0.4%)(1.6%)Net incomeNet Income*(66)(0.5%)

91

0.7%

231

1.8%

462

3.3%

*

pre goodwill and exceptionals

1919

Development of Net Cashin € m

H1 2003 H1 2002

Net cash at the beginning of the period

1,224

1,533

Gross Cash Flow from Operations*
Change in working capital

848
425

1,022
(53)

Cash used for investing activities**(1,312)(1,019)of which Industrial Capex (additions)***of which Customer Financing net additionsof which Others****

(823)
(344)
(145)

(855)
(271)
107

Free Cash Flow**

(39)

(50)

Free Cash Flow before customer financing

305

221

Dividend paid
Astrium first time 100% consolidation impact
Others(245)(74)
48(404)0347

Net cash at the end of the period

914

1,426

*gross cash flow from operations, excl. working capital change** excl. change in securities and consolidation changes*** excl. leased assets and financial assets**** in 2002 mainly Aircelle disposal

2020

Continuing the Active Hedging Policy
EADS hedge portfolio (US$ 40 bn) as of June 30, 2003
US$ bn
10864
208.8
5.7

Volume already hedged

6.86.35.3

4.3
1.7

2003
(6 mths)€ vs $£ vs $

0.95
1.56

2004

0.94
1.53

2005

0.95
1.47

2006

0.96
1.48

2007

0.97
1.47

2008

0.95
1.47

2009

0.95
1.46

0.8
2010

1.01
1.49

Hedge rates applicable to EBIT

Approx. 50% of EADS US$ revenues are naturally hedged
by US$ procurement
2121

Position EADS for the Market upturn· Confirm 2003 Targets

ü 300 deliveries; Revenues in same range as 2002,
based on 1€ = 1.10 $ü EBIT* in same range as 2002
ü Free Cash Flow positive pre-customer financing
ü Restrictive customer financing· Resist to the current downturn and monitor markets

evolution· Secure tomorrow’s cash and earnings growth*

pre goodwill and exceptionals

2222