Airbus(EADSY) - 2022 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For the full year 2022, the company's revenues increased to €58.8 billion, up 13% year-on-year, primarily due to higher commercial aircraft deliveries and the appreciation of the U.S. dollar [17] - The adjusted EBIT for the year stood at €5.6 billion, an increase from €4.9 billion in the prior year, driven by increased deliveries and some non-recurring elements [17][19] - Free cash flow before M&A and customer financing reached a record €4.7 billion, supported by favorable working capital and foreign exchange impacts [18][24] - The net income for 2022 was €4.2 billion, with earnings per share reported at €5.40 [20] Business Line Data and Key Metrics Changes - In the commercial aircraft segment, 661 aircraft were delivered in 2022, representing an 8% increase compared to 2021, with a target of 720 deliveries for 2023 [7][27] - The helicopter division delivered 344 helicopters, a slight increase from 338 in 2021, with revenues rising 8% to €7 billion [30] - The Defense & Space segment saw an 11% increase in revenues, driven by higher military aircraft volumes, but faced challenges due to geopolitical tensions and inflation [31][14] Market Data and Key Metrics Changes - The company booked a total of 1,078 gross orders in 2022, with a net order of 820 aircraft, resulting in a backlog of 7,239 aircraft at year-end [11][12] - The commercial air traffic recovery was noted, with domestic and regional markets leading the way, and international traffic progressively closing the gap [10] Company Strategy and Development Direction - The company plans to ramp up A320 family production to a monthly rate of 75 by the middle of the decade, reflecting long-term demand visibility [6][34] - The focus remains on digitalization and decarbonization of processes, with significant investments in sustainable aviation fuel and hydrogen technologies [35][37] - The company aims to maintain a strong governance culture regarding ethics and compliance, particularly in light of recent geopolitical events [9][10] Management Comments on Operating Environment and Future Outlook - The management expressed confidence in future financial performance despite ongoing supply chain tensions and geopolitical risks [8][9] - The guidance for 2023 includes expectations for around 720 commercial aircraft deliveries, an adjusted EBIT of approximately €6 billion, and free cash flow of around €3 billion [33] Other Important Information - The company reported a net cash position of €9.4 billion at the end of 2022, exceeding its net pension deficit by €6.5 billion [25] - The backlog in value increased to €449 billion, reflecting a strong book-to-bill ratio above 1 [12] Q&A Session Summary Question: Free cash flow guidance and potential shareholder distributions - Management highlighted that the €3 billion free cash flow guidance for 2023 is slightly below market expectations due to headwinds and tailwinds from working capital adjustments [41][42] - Discussions regarding potential extra distributions to shareholders are expected to take place more in 2024 than in 2023 [43] Question: Confidence in revised ramp-up targets - Management acknowledged the challenges faced in 2022 but expressed confidence in the revised ramp-up plan based on current supply chain conditions [45][46] Question: Supply chain issues and delivery delays - The company is actively managing supply chain challenges, which have diversified beyond just engine delays, and is working closely with suppliers to mitigate risks [49][50] Question: Improvement path for Chinese assembly line and A321 capacity - Management confirmed that the Tianjin assembly line is transitioning to a flexible A320/A321 setup, with expected improvements in delivery timelines [53][54] Question: EBIT bridge from 2022 to 2023 - The management provided insights into the key moving parts affecting EBIT, including aircraft contributions and cost inflation, indicating a manageable impact from inflation [57][58] Question: Actions taken to address supply chain issues - The company is enhancing visibility and crisis management capabilities within the supply chain to better navigate ongoing challenges [62][63]