Q1 2022 Airbus SE Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the <unk> Q1, 2022 video through these conference calls I am cause Yogi Ohara Jefferies Conference. Please note that for the duration of the presentation. All participants will be on the Houston only mode and afterwards, it will be a question and answer session. The conference is being recorded.
After the presentation there will be we have the opportunity to ask a question at this time I would like to turn the conference over to your host.
Yeah of course and U S M and then negotiate please go ahead.
Thank you.
Good evening, ladies and gentlemen, and thank you for joining us today for Q1 2020 through his next quarter.
Good.
I mean, you can have.
Hearing us to them.
Our Q1 results.
First as I, just clearing the imager Cole I want to repeat that our folks at <unk> are we for people affected by the humanitarian crisis and driven by the attack on Ukraine.
Message Seventy's.
And medium fleet.
From their homes.
Tavis I'll highlight TSV.
As always and remains to secure our people and operations.
Besides in line with international sanctions, we suspended deliveries and support services to Russian customers and <unk> as well as a supply of spare parts of the country.
For all of our activities across all divisions, we are hope shining and will continue to apply the sanctions which are in place.
The ongoing military concrete reminds of society's that peace democracy, and freedom can never be taken for granted that needs to be euro and need to be.
We expect to face additional complexity as we progress in 2022 <unk> from.
<unk> 2004, pensions, but also from increasing impact on global supply and logistics and in particular in the context of the new ways.
Ways you China.
That being said in Q1, we were able to deliver a one off and unfortunately, we have run.
So a 14% year on year increase.
I'm not sure that complexion of oil companies operating in this complex environment.
Following an analysis of global customer demand as well as an assessment of the industry ecosystem readiness. We all know we're working with our industry partners to increase the FY 2017 production rates further to 75 aircraft a month.
In 2025.
Now back to the first quarter.
<unk> financial results benefited from the default on competitiveness as well as the impact from cost containment.
Implemented while the Covid crisis.
Which will be progressively phase out as we have resumed activity.
Our EBITDA adjusted EBIT stood at one 3 billion euros, and our free cash flow Detroit and Christina financing was $4 2 billion in Europe .
Our solid Q1 EBIT adjusted.
Other includes a nonrecurring positive elements of $4 4 billion euros.
Two retirement obligations, partially offset by $4 2 billion negative impact from the international sanctions against Russia.
Joining todays call Dominion can I will update you on how we are impacted by the more complex.
Business in women's.
When it comes to the impact from the international sanctions.
Our direct exposure tuition customers is relatively limited across our product portfolio and on the supply side, we see that the operations are protecting although the short and medium term. It gives us the time to secure <unk> solutions where needed.
Nevertheless, given the increasing complexity of the environment.
Notably the worsening credit situation in China, We will continue to closely monitor all their <unk> X was two <unk>.
Efficient supply level as well as the associated inflationary pressures.
Based on what you want to hit US in Q1, we keep our guidance for 2022 unchanged.
Our overall risk profile for the remainder of the Europe has become more challenged.
Let's now look at our commercial environment.
As I said, we are operating the complex environments effecting global economy recovery and we see a contrasted picture when it comes to the evolution of global air traffic in.
In China <unk>.
<unk> is essentially deteriorated sharply.
Currently.
Around 20% to 30% of its peak of 11 five notes.
The degradation of liquidity attrition in the countries of concern.
Short term this may start to impact the ability of some of our airlines customers.
Take delivery of some of the aircraft.
Moreover.
The geopolitical crisis is adding complexity.
Even for Sps restrictions in Russia.
In Ukraine.
A small portion of it.
<unk> traffic.
<unk> of international flights as well as increasing sugar prices have become a headwind for a number of our airline customers.
You contrast, <unk>.
<unk> is coming back to Tony.
And between all countries, where travel restrictions have been lifted this confirms robust underlying air travel demand.
Even for the global situation is contracted for the quarters to come we still expect commercial air traffic recovered to pre COVID-19 levels between 2023 and 2025.
Domestic and the Haynesville and the markets leading the way.
No change and that forms.
Five of the complexity.
Let me remind you of all other than backlog each one.
We booked 253 gross orders of which 243 single aisle and wide bodies, confirming our strong commercial momentum.
And then out of the 10 in wide bodies.
For our recently launched <unk>.
<unk>.
We sold 170 cancellations, which we are already largely anticipated and embedded back to valuation as of end of the year of 2021.
As a result net all of those were positive at ATC across.
That could be units and multi two seven.
In 2000 to be across at the end of March 2022.
Including 5821 between Xiaomi aircrafts.
With regard to Russia.
Backlog includes 15 50 orders.
<unk>.
Looking at helicopters in the first quarter, we booked 56 net orders compared to 40.
Q1 last year was credit cost programs, we have.
Also awarded by <unk> and others for the Tiger program for.
42 helicopters for Falcon Atms for Spain.
In addition, we continue to see positive momentum for campaigns, making a home countries.
Finally.
In defence and space.
Q1 order intake by the $3 2 billion.
Corresponding to a book to be around one three.
This includes the Eurozone global contracts signed in February covering the development and manufacturing of <unk> and five years of initial in service support for Germany, France, Italy and Spain.
This signature keeps up the development of one of the most ambitious European defense programs, which will be entirely designed and developed from this stuff without dbms.
<unk>. The result of <unk> work between the industry <unk> emissions will strengthen Europe strategic autonomy and silver with its power.
Additional orders booked in the quarter relate mainly to military aircraft.
On the aircraft the future combat Air system, we are fully committed to the program the importance of which is acutely evident in times of crisis.
We continue to work towards launching phase one these HIV sure which is the next milestone for the success of this crucial European issuance program.
On the space Venus with clarity money joined institution or programs conducted in cooperation with the Russian State Space Agency together with our partners customers.
The suppliers.
Let me remind you that we no longer have access to distribution launches.
In the meantime, preparation of 2022 and five.
And as you guys see launches are progressing according to plan next year.
When we owned the typical space.
I want to thank the teams for the historical agreement signed between <unk> and Amazon and Apple for 18, six small sheet of elevated Peters.
<unk> used trades to great potential.
This patch hall.
In the context of rising defense spending and a strong drive for European strategy for tournament, we stand ready to support the European governments in this respect.
And now Doug.
Equally picture.
Financials. Thank.
Thanks, Joe and Hello, everyone also from my side.
Our Q1 2022 revenues increased to 12.0 billion euros up 50% year on year, mainly reflecting the higher number of commercial aircraft deliveries and a favorable mix.
Our Q1 EBIT adjusted increased to $1 3 billion up from $4 7 billion euros in Q1, 2021.
6 billion increase.
Includes a nonrecurring positive at a minimum of <unk> 4 billion in Europe related to the Remeasurement of past service costs in our retirement obligations.
On the other hand, the amount of minus <unk> 2 billion has been recorded in Q1, resulting from the impact of international sanctions against Russia and it also reflects our effort on competitiveness and the impact from cost containment implemented throughout the COVID-19 crisis.
Our Q1 EPS adjusted looked at one year of 14 <unk> per share based on an average 786 million shares.
Our Q1 free cash flow before M&A and customer financing was.
2 billion, reflecting the level of deliveries competitiveness and impact of cost containment.
Offset by an increase in working capital, mainly driven by inventory increases.
Onto the next slide regarding our profitability in more detail Q1, 2020 to Abbott reported $1 4 billion Euro.
EBITDA adjustments totaled a net positive $4 2 billion, including 90.
19 million positive impact from foreign exchange mismatch and balance sheet revaluation.
$11 million related to the eight 380 program and minus $13 million of other costs, including compliance costs.
Earnings per share reported includes 106.
6 million positive financial results.
Reflect the positive net impact from the revaluation of certain equity investments.
It should be offset by the revaluation of financial instruments as well as minus 76 million of net interest result.
Tax rate on our core business is around 27% the effective tax rate on an income is 25%, including the tax effect from the revaluation of certain equity investments, partially offset by deferred tax asset impairment.
The resulting net income is $1 2 billion euros with earnings per share reported.
While Europe 55.
All in all we're off to a very good start for the fiscal year 2022.
Regarding our hedging activities in Q1 2022.
$4 4 billion of hedges matured with associated edit impact at a rate of 121 versus 116 and Q1 2021.
During the quarter, we implemented $2 $5 billion of rollovers, mainly to adjust the 2022 intra year phasing of our hedges.
We also implemented $3 $5 billion of forward at a rate of 118.
For the years 2024 and 2025.
<unk> 3 billion of hedges were disqualified to reflect the impact of the international sanctions against Russia.
Resulting in a negative impact financial results.
As a result, our total hedging portfolio new Isabella.
Stands at $87 1 billion with an average hedge rate of 125 unchanged versus December 2021.
Now, let's look at our cash evolution in Q1 2022.
Our gross cash from operations of $1 2 billion in Europe , mainly reflects our EBIT adjusted as well as positive phasing ex payments.
The working capital increase of $4 7 billion, mainly reflects inventory build to support the <unk> hundred 20 family ramp up partially offset by favorable timing of cash receipts and payments.
Year to date.
And continue to weigh on our free cash flow before M&A.
Q1, 2020, Capex was around minus $4 3 billion Europe , whereas the <unk> 5 billion in Europe in Q1 2021.
Recall that the prior year's quarter included acquisition of real estate assets in the UK.
We expect our capex to be around minus <unk> 4 billion growth in 2022.
Free cash flow reported was <unk> 2 billion.
M&A activities accounted for minus 6 million euros revised customer financing represented an outflow of minus 46 million euros.
The aircraft financing environment remains solid.
Efficient liquidity in financial markets for our products.
Going forward for further cashed in in recent years will not be sustainable as we anticipate some usage of cash in this in the coming years.
Our net cash position is stable at $7 7 billion Euro of end of March and our liquidity position remains strong and stood at $28 8 billion euros in.
In Q1, 2020 to Moody's and S&P, both confirmed ever credit ratings to effectively a two and a flat and remove the negative outlook, reflecting our strong financial and operational performance.
Going forward, we will continue to adopt and an active approach when it comes to managing our liquidity with the objective of maintaining a robust credit ratings now back to you.
Thank you very clear.
Now on to commercial aircraft.
So in Q1, we delivered 142 across 48 customers.
The net year to date delivery number of 140 reflects a reduction of 12 craft you've used vehicles sold in December 2021.
For which the <unk> was not placebo do too.
The international sanctions put in place.
Now when we look at the Q1 2022 institution by our cross selling on the $8 20, we deliver 11 aircraft. We continue to ramp up and are on track for the rate 14.
And in the niche for the middle of the DTA on the FY 'twenty, we delivered about 190 aircraft of which 58 <unk> hundred 21.
More than 60% is going to make the calculation.
<unk> trends progressing towards rate 65 by summer of 2023 in a complex environment as I mentioned earlier, we are now working with our suppliers and partners to enable monthly production rates of 75 in 2025.
Abbas will meet the higher production rates by increasing capacity.
At our existing industrial sites and growing.
Industrial footprint.
In mobile in the U S with a file while investing to ensure quarter somebody sites are <unk> hundred 21 capable.
On the <unk> hundred 21, <unk>, we continue to work towards first flight by the end of Q2 2022.
Initially planned for the end of next.
Next here.
Regrettably the entry into service is now expected to take place in 2000 2012.
As I said in the previous court.
We work hard with our customers to try to mitigate the impact of that situation.
On the wide body, we delivered 22 aircraft of which $16.
56, <unk> and six <unk>.
As previously announced we target to increase our <unk> monthly production rates too.
Almost free.
At the end of 2022 and <unk>, we continue to expect to increase the monthly production rate to around six at Cros in early 2023.
In March very happy to report that the first <unk>.
Slide followed by 100% sustainable aviation fuel to place. This is the third Airbus aircraft type to fly with at least one engine operating on 100% stock after inevitably 15 March last year.
Last year 2021.
59 Teu in October of last year as well.
Now, let's look at.
Atlas commercial with financials for Q1.
So the financial reflect the net delivery of the 140 aircraft.
142 that I mentioned before again, one can use by the two deliveries.
And there are.
International sanctions.
Revenues increased by 17%, John mainly reflecting the higher number of deliveries as well as at February well mix.
You have in mind, what I said on the widebody deliveries the increase in EBIT. Adjusted also reflects defaults on competitiveness and.
Our thoughts on cost containment. It also includes the nonrecurring productivity impacts on retirement obligations.
As described by Jimmy Choo, partially offset by the impact.
International sanctions on helicopters in Q1, we delivered 39 helicopters in line with Q1.
Of 2021.
Revenues increased year on year, mainly reflecting growth in services and a favorable mix of programs.
Can you touch the Steelers reflects nonrecurring elements, including the aforementioned positive impact related to the retirement obligations.
And.
<unk> completed our review of Q1, 2022 with defense and space revenues.
The increase year on year, mainly driven by military aircraft business and slowing the complexity that shortfall.
Your dorm in Seborrheic EBITA. Adjusted also reflects the impact related to repayment obligations again, partially offset by the consequences of international sanctions on the space business.
On the Oklahoma than.
We delivered one and across each one.
Although by the Turkey chefs.
We continue with development activities towards achieving the revised capability all of them up high profit activities are progressing in close alignment with our customers.
Risks remain on the quantification of technical capabilities and associated costs on that cost of Falcon and <unk> in particular with regards to power plants.
This collection.
On securing ex portfolios in <unk>.
As Beth.
Revised.
Baseline.
Now.
Moving onto.
The guidance, let me remind you of our guidance on.
On the basis of.
It's 2022 guidance the company assumes no further descriptions to the world economy.
Compounding the internal operations and its ability to the Europe other concise competitive 2022 guidance before M&A and on that basis, the company targets to achieve your 2022.
Around 720, <unk> aircraft deliveries $5 5 billion EBITDA.
$3 five beginning August .
Free cash flow before M&A and customer financing.
This guidance reflects our expected growth trajectory and the investments we are making to prevail future.
After a good start in Q1.
As we have shared.
Shared with you we see unfavorable evolution in our risk profile for the remainder of 2022.
Yoga or supply chain situation, the current situation in China as well as the Russian invasion of Ukraine, or making the award to a global recovery more initiatives.
We all again.
Payout of Aten uncertainty.
E.
Complexity.
This brings me to our key priorities.
Next page.
First delivering on our guidance, we remain a top priority in 2022, we will work hard to mitigate the risks and capitalize on the opportunities across our businesses.
Moreover, we will continue to build more resilience.
Relying on the diversity of activity just homebuilder backlog from our customers the close collaboration with our supply chain.
As well as our capability to control any of it.
On all.
Although backlog, we remain focus on feeding the skyline.
Our commercial business in the <unk>.
We see a strong demand for <unk>.
Single item homerun.
We also see opportunities for the Wedbush Sigma, especially in the second half of the decline in the context of increasing sugar prices and the need to decarbonize.
Sure.
For the military side of our business the return of raw in Europe , clearly demonstrates that strong defense capabilities are vital for presenting.
And security.
<unk> strategic compass.
Endorsed by the European consumer in March.
Hi, Kelly.
Underlines the importance to reinforce European defense by stimulating innovation and investments here, let me quote.
Measures should be taken by the end of 2022 to promote and facilitate access to private funding for the defense industry.
So by making a virtue to the possibilities offered by the European investment Bank.
And of course.
We welcome the clients.
This decision.
We have to have us with a long history of European cooperation start obviously ready to support our governments and to make contributions to the strengths of the armed forces.
Europe .
And.
Nathan.
Moving to the ramp up of our FY 2017, which remains of course, one of our top two priorities. After what we went through together in the past two years and pleased to be in a situation to increase our rates to 75, which again will benefit the entire global value chain and we support employment, especially.
Hong countries and.
In the U S.
Now I'd like to know who your attention to some important progress on our system ability join which is at the heart of our Companys purpose.
In Q1.
We engage with the <unk> and the science based target initiative.
We're committed to <unk> science based carbon reduction targets, including scope.
Hopefully USP use of solid products emissions.
We also officially launched Zoe demonstrates our program with the ability to pick the variety of hydrogen technologies.
On the growth in India.
A key part of the multiyear program. The hydrogen commission engine will be developed by our partner CFM International.
<unk> will be an important milestone to our roadmap to deliver the world's first zero emission aircraft by 2035.
Abbas Fox sustainability commitments also include respecting human rights and fostering inclusion.
On this topic I'd like to highlight the reason of our human rights policy, which.
Which defines our approach to human rights and formed the backbone of how we progress usually embedded risk fixed volume Enright whoa.
<unk> organization and supply chain.
As I come to the end of my.
Remarks, I hate lines that and then <unk>.
Of the core, especially with the Safe Harbor statement.
That was probably a bit too enthusiastic and started.
Bit too fast and then should I.
And it's.
It's another innovation today two ended by the Safe Harbor statement.
Oliver.
Yeah.
Of course.
The supporting information package with you that it includes the <unk>.
<unk>, which we have taken you through the financial statements.
During this call we have two follow.
Follow up looking statements and the package you received.
Thanks, Bob I'll statement, which applies to this call.
The entirety of the call and please read it carefully.
For the fixed base.
Safe Harbor over flight absolutely deal.
So we now start our Q&A time.
Please introduce yourself and your company when asking a question.
He is limit yourself to two questions at that time and this includes second question.
Also as usual.
Since we met that.
And slowly in order to help all participants, particularly of sense to us.
Thank you your question.
So could you. Please go ahead and explain the procedure followed Patrick.
Ladies and gentlemen, if you wish to ask a question. Please press.
Zero one Amit. Thank you you bet.
Wish to remove yourself from the queue. Please press <unk>.
Q Amit. Thank you you bet.
A quick question on the handset while asking questions.
Jeff Good question Keith.
Thank you you bet first question is from Mr. Ben Heelan from Bank of America.
Yes. Good morning, guys. Thanks for taking my questions SaaS would be on the production rate increase can you talk a little bit about what's giving you the conviction that the supply chain can meet these these high rates we've had over the past couple of months about supply chain pressures all the way down different tiers of the supply chain. So what's giving you that.
Conviction the supply chain can manage production rate increases beyond next year that'd be the first one and then secondly on the Exxon.
Is there any color that you can give around exactly what the challenges that you faced around the certification.
And how should we think about extra costs and risks of penalties now that that entry into service is being delight. Thank you.
Yeah.
Thank you Ben hope you're well.
So on the rate 75.
We have the demand side and the supply side I think.
On the demand side of the efforts very strong demand and supported by what we see happening. Your question I guess is more on the on the supply side, what is giving us the trust with the assessments that we have run with.
Very large number of suppliers in the most important ones.
Keep in mind.
If and when and at what speed.
<unk> ramped up beyond the 65 was possible.
Got a feedback tells us that it's possible, obviously always placebo to ramp up the honest at the number of it in a certain timeframe and.
We see that.
From the rates 65 that we intend to reach mid of next year and 2025. These give enough time to have a speed of ramp up that is consistent with what the supply chain will be able to didier.
Actually we still the short term.
Of challenges and we tried to share them with you.
But it's also linked to the fact that we are moving progressively out of the <unk>.
Could be quite a successful emerging from COVID-19.
This complexity on the supply chain and we have as well on top.
The consequences of the applications.
What's happening in Ukraine, and the sanctions, but beyond the short term mid term and the long term. That's what we have assessed with the supply chain and we feel comfortable enough to launch that.
Our rate increase within our participation.
Remember that I said, we want you to decide around middle of the year actually we are accelerating because we had these digital sending us it was the right moment and we are doing.
Conditions for launching that as rates increase.
Fix it all.
But basically it takes more time.
And thats Unfortunately, not completely uncommon in the development of.
New versions of claims.
A bit more time, we are coming close to the slides.
Slides, we are now waiting to the development phase we are starting to submission and we are working.
Working with the certification authorities to growth with the certification process and we see that is going to be going a bit beyond the end of 2023. So that's what we are sharing today.
When it comes to negotiation, it's customer by customer on each situation is different.
Want to comment.
On this one because I think I'm not capable of coming to you and give you a detailed color on desktop which is true.
To be honest.
Your questions, but thats part of the partnership we have with customers and this is going to move forward, which we are announcing today is not changing the pick <unk> mix it up a lot of that work.
Thank you and our next question.
Sorry amongst question.
Next question is from Mr. David Perry from Jpmorgan go ahead.
Okay.
Dominique.
First question.
Well I guess, all about them listen to investors, we are sitting in front of similar spreadsheets.
The production rates seen in testing and FX rates of one five.
It's folks out some interesting numbers.
Trending towards 10 billion of bad debt in 2025, and civil alone. So I guess I would just like to get dominate.
The acuity to tell me.
I'm not thinking about cost inflation or anything.
Excitement and then the second question is a much simpler one could you just comment on the titanium situation I don't think you said mid single maybe I missed it.
Okay.
Thank you David I will take the.
EUR one with Italian.
Because basically there's nothing new on that side we are.
Developing a secondary sources moving forwards you know that we are protected on the on the short and medium term.
Basically the situation moving forward and there is no specific.
And therefore, we can we can give at this stage. So that's the easy path Dominik you excited to take the opportunity to answer the question sure sure.
Right on the U S. Dollar is actually a quite interesting for us not so much in the near term because as you know.
We have a kind of rolling hedging policy, where we tried to temper the effects of the volatility in the U S dollar Euro exchange rate.
Towards selling the future revenue so to speak.
There is a slide in the deck, which have commented that they can see that for the years 2002 through 'twenty four.
We have about a $20 billion per annum hedge portfolio against exposure.
So for the 2300, <unk>, a fully hedging exposure, but production at Reed.
And then you mentioned 2025.
Short $13 3 billion forward sales as of March 2022.
So a considerable part is hedged and the rate of that 135, yes.
We approach 2025.
Have a great sustained had such a strong dollar you wouldn't be able to mention what tractor rates and that potentially could offset to some of the downside PSAT modernization side. So I think it remains to be seen how these two work against each other but I think it's.
Right you mentioned these two where the price point and otherwise I think that all of our guidance for 2025.
We have been guiding the year as it did and yes, what is it that the ramp up provides opportunities for further significantly improving much.
Enter them.
Next question is from Mr. Sansone from exempt.
Yes, good afternoon, everyone. This telephone into coming back so and thanks for taking my question.
It's going to be two follow ups.
The topics we just.
Address the first one would be on the inflationary pressure.
But also within the supply chain.
Can you just sort of how you approach the topic.
And especially how do you.
Ill deal with 201 Youll supplier themselves.
Under significant pressure from raw materials, and labor and us at the same time to contribute to.
Considering the increase in production rates.
And.
The next question would be.
More on the on the <unk>.
Quality cost of our non core costs could you.
Try to quantify for us or at least quite decline.
Non quality cost in <unk> hundred 20 production compared to pre crisis, what is doing significantly better.
Putting a number on that efficiency level.
Thanks.
Dominik.
I'll take the first one on nutrition and I will take the second one picture. So on inflation I think firstly I want to highlight that that what we've seen in significant energy price spikes and so forth.
It is now.
We have seen significant headwinds from that in the bridge from 'twenty, one to 'twenty, two but I think it's taken care of I'm not expecting any wild deeps, there because now the procurements OSB for 'twenty two is quite real secured.
The issue with inflation is.
The compounding effect of many years so.
It's not so much an issue in the near term but.
Very high inflation persisted for several years in a row of course that will compound and that put pressure on us and we have of course prices locked into our backlog, we have certain escalation mechanisms, but they have limits.
<unk>.
Ben It's right that also our suppliers would come under pressure that we have to see on a case by case basis, how we deal with that but I think it's a little bit speculative because nobody knows to date, whether we will see really heightened flavored way way beyond the phase targets of the central banks for law.
And the cost of quality I think thats, yes.
So the cost of <unk>.
It's a good question actually.
Compared to last year.
Recently, we have not seen the non quality check.
<unk> significantly is very consistent with last year, what is changing tremendously is <unk> suppliers to deliver on time and therefore this is getting to a number of crises descriptions.
Situation, we have to manage which are time consuming and quite expensive and that's.
Hi.
Similar to what we call the acceleration cost, which is the ramp up.
And the effect of the supply chain difficulties to flowing.
Given the complex environment remain as we call. It this is indeed there.
Very significant but I'm not able to give a nonsurgical where does it stand compared to pre COVID-19 neutral communicate who can do this quickly you need to put it in this way, it's more trying to assess upfront to keep it as low as we can and making sure. We have limited impact on the side ideally no impact on their side to not.
Slow down their own Pip, but also managing the prices one by one putting a lot of resources as soon as we see the crisis emerging to make sure. We can manage these four again, each reaching the thought and potentially having an impact on the data delivery of these efforts that is to the higher and whats it wasn't.
By far higher.
I have to compare before COVID-19.
I'm, sorry, I cannot give you.
And also with substance but.
Is it significant.
So we are going to.
Comparable situation I know that figures to share.
Thank you Sir our next question is from Bob <unk> from Goldman Sachs. Please go ahead.
Hi, Good evening gentlemen, thank you for taking my questions I have.
And I think.
A lot of questions have already been answered, but just to follow on on the clinical cost inflation piece. Obviously, we've recently seen this estimate estimate the UK strike action, resulting in kind of wages increasing by it.
All of a sudden could you give us a bit more color on sort of how youre seeing labor inflation, particularly as we're in that kind of ramp up period.
And then a second question.
Just on PDP is could you give us a comment on kind of the trends that youre seeing in PDP in the first quarter and what youre expecting to see through the rest of the year I guess as we're seeing some normalization happening versus what we saw last year. Thanks, so much.
Thank you for the questions I'll try to refer to the first one and Dominik.
This should take the one on the <unk>.
So we are all.
After two years of.
Literally increase of salaries.
Given the COVID-19 situation, the restructuring, which we call it disciplined but it's something that we see as we head into the rest of the industry.
Ramping up again.
I think we deliver a strong 2021 in an environment, where it's difficult to find the resources and is indeed.
More power on the side of employees in general and also the reasons too.
Our cross sell our increased when we see the inflation.
It's no surprise that.
The level of slotting fees that we are giving them probably will be continue to give you are going to be significantly higher than <unk>.
What it was in the previous year ups is a challenge for us is to try to.
Come to an agreement that makes sense for our employees and makes sense for the company.
And honestly I'm very.
Thankful to what the teams have done.
COVID-19 that can get done a great job.
<unk>, who is a very difficult situation in navigating weathering the crisis, we've been through and therefore, we're trying to find that sweet spot that makes sense for our employees and makes.
Since our employer.
Figure.
The numbers.
See higher and we don't have a situation where for instance, nutrition in Spain is 10%.
Paul.
The diversity between the different countries where.
Where we are located in some countries, it's really high and we want also to make sure our employees remains committed to the company.
Loyola unhappy with Airbus and again, that's the sweet spot to try to refine.
Yep.
PDP is if you look into our balance sheet, you'll see that the mix of contract assets and liabilities actually gives us a positive impact on cash flow statement I think that is a sign that the higher negative variance. We had on the working capital on PDP last year, which was still the overhang from the deferral activities in the copper price.
This is largely worked off so we expect that kind of PDP FPP float to be more neutral this year and with the ramp and also some increase in trade liabilities, which will help us to.
Offset the inventory increase in our working capital.
Thank you.
Thank you next question is from Mr. Keith does may now from Deutsche Bank. Please go ahead.
Yes, good evening two questions. The first one is on the.
The profile.
To get to 75.
Is it are you planning to be at 70 in 2024 or is it a different profile.
With a second question afterwards.
It's a bit premature to give you the number of deliveries a month in 'twenty four 'twenty five.
We intend to which the rates 65 mid of next year, that's an important data point and then.
The 75 in 2005, and we do this progressively as we as we move forward. So no new specifics to share on the precise dates with the precise number I'm sorry, except neither of 23, 6%.
Okay. Thank you very much my second question is completely unrelated it's more of a defensive space.
I was I was wondering in the context of cyber security being so important right now what is your what is your strategy with regard to your cyber security NTT, which appears probably a bit small versus other peers.
Could you share with us your strategic vision around this.
Subdivision in let's say.
So first and foremost.
We want to be.
Protecting.
Our products our services and therefore, our customers. So there's a lot of cyber security.
Resources skills talents capabilities that are focused on protecting those assets and therefore, serving customers with cyber secure solutions and thats, a very important part of what we do on.
We are setting cyber services to third parties to external customers and that's also something we do.
And that's what we're doing on cyber security.
<unk>, which is embedded in our Airbus Defence and space Division. Because then those cyber security services are addressing mainly and first and foremost.
<unk>.
Governmental customers, but also customers with whom we work on the insurance on the space on the military aircraft. So it's.
Targeted to those customers.
Moving forward, we want to be doing more of this.
Of protecting our customers and serving our customers and this has to be seen in combination we are not trying to be bigger than others in cyber services to third parties, we want to be excellent on what we do on our platform.
Other services and again setting these critical customers as well as we can where it makes sense.
Thank you Sir our next question is from Mr. Douglas Amit from.
Sir Please go ahead.
Good evening. Thank you.
Yes.
First question is on some of the deliveries you've had where.
You actually you Havent completed the physical delivery, yet you've transferred title and counter to this delivery. We saw this aeroflot issue with the two airplanes.
So what I'm interested in is.
<unk> have some like that with China, how many airplanes do you have in that.
In that state in a sense not physically delivered in do you see any risk around those airplanes as we go forward those deliveries that would be the first question and then the second is a follow up on the <unk> hundred 21 XLR.
If you go back about three or four years ago. There were questions discussed around safety of with customers I know in the safety of this new design with <unk>.
With the.
Fuel tank and.
Was it a surprise to you to see this come up with the answer now.
Is it something that also is being done in parallel with the FAA given that the FAA has become much more.
Much deeper in the scrutiny of a lot of certifications lately.
Yeah.
Dominion can do want to take the question sure.
Sure.
So the defense delivery agreement, where basically we have a situation in 2020.
<unk> has taken delivery of the customers unable to pick it up at that point in time.
A typical example.
Also as an example.
<unk> is a situation, where we really get full aircraft prices paid where all the acceptance process is run through in terms of inspection and acceptance by the customer. So it's purely they cannot mechanical automatic transfer at a pre agreed date, which needs to happen. We don't have a lot of these aircraft in storage.
It's fluctuating depending on certain customers, but I do not consider it as a material risk I think it was a truly exceptional because of the frustration of the contract now simply physically to the committed to 250 and that thing over with our customers to just frustrated because of FX.
It's a very specific case linked to the fact that.
The across the space with comp sales tighter was strong.
T core move was no longer placebo because of sanctions preventing that particular movement, that's really exceptional.
On the <unk> at all.
Indeed, the <unk> and <unk>.
Cooperating and working together.
There is a primary certification of <unk>.
We are primarily working with.
And we are moving forward in.
In the development and certification process like we do for other products.
There are some modifications that are.
Quite conventional orders, which are a bit more specific to these volumes.
<unk>.
The classical.
Our development and certification process that we see moving forward. Unfortunately in those situations.
Tuitions.
Rare.
But we have to take more time to fully comply and to demonstrate.
On paper.
Contest and we cited the compliance of which we design and produce with our requirements.
A clear where we stand today the thing that I would consider are.
Except for what it takes a bit more time than what we had anticipated.
Thank you Sir our next question is from Mr will go backs that out from Jessica Research. Please go ahead.
Thanks, so much and good evening.
Good evening.
A couple of questions from me first of all you mentioned, China as a risk.
And I was wondering if you'd seen any actual delivery delays as yet from Chinese customers.
Just maybe an idea of how many planes you have schedule for delivery in 2022, and then secondly on the <unk> just to follow up and do these changes potentially add weight to the aircraft and impact the targeted range of the plane. Thank you.
Yes.
Yes.
Yeah.
I think we are sort of the same number of deliveries planned for 2022 than what we had in 2021 for the Chinese customers.
So.
<unk>, which use more of a proportionate given the.
We ramped up.
The deliveries in 2022 compared to 2021.
Yes, China is.
Is there a risk because of the.
<unk> situation.
I mean, we don't know how long the.
The emissions the restrictions lockdowns and the quantum times, which are in place today, we lost and it has an impact on the short term ADT.
The airlines to come and take delivery, but also.
On their own financial situation is very low at traffic that we observe today in China.
Extending to the second quarter in the third quarter and Thats why we are monitoring the institution in China very carefully.
The only good desktop point, we have wage was Manhattan in 2020, and you'll remember that we were in a similar situation that was recovered later in the Euro and finally, we found our way forward and to some extent as well last year or so.
That's why we see it as a risk, but it's kind of risk which has been <unk>.
And the pivotal <unk> and therefore, we need to see how it plays out this year.
On the <unk> at all.
We are in the development of the product.
This impact in the weight of the range I don't know what you mean by this.
Is the development of the play is the development of our volumes, we are taking commitments to our customers when it come to the slight admission performance and we want to stick to those commitments and there's nothing to be to be reported here. That's just the time it takes to get there. It is a bit more than what we were expecting before.
Thank you. Sir next question is from Mr. Jos <unk> with Deutsche Bank. Please go ahead.
Thanks, Good evening.
Just looking at the sort of puts and takes in the quarter.
At the end.
Presentation I think.
Expected FX rate was 124 for Q1 and it came in at 121. So that's probably 100 million tailwind you had 400 million write backs you have $200 million negative from sanctions.
So that's sort of a 300 million tailwind if you will and then you've got the other couple of things just would like.
Some comments on is the competitiveness increased competitiveness, which is presumably be permanent.
But also the cost containment.
You mentioned would gradually decrease can you give any idea of what.
The headwind going forward as that cost containment decreases please.
Sure Jonathan So first of all Q1 as you rightly say reflects $4 2 billion of the Ukraine prices, but we have to stress that that is fully covered the immediate impact on the balance sheet.
Certainly effects, which concerns the remain to do the remaining three quarters of the year, which are actually more significant and <unk> 2 billion.
There is more to come as headwind from missing deliveries that were planned materializing to Russia.
And also some impact from the space business as we mentioned so.
That cannot be extrapolated so to speak so there will be more it's not a pure one off but there will be more headwinds during the year from that so we will meet the outperformance, which I think you referred to in the Q1 to mitigate the negative impact from the Ukraine crisis.
And.
On the other hand to over 4 billion of this re measurement and pension liabilities is a clear one off which will only occur once so flip.
From that perspective I think.
As we said the guidance is really up.
It has become more challenging and the risk.
Profile has been more.
Because of them.
The pressure that has been put on the fiscal year 'twenty two by the Ukraine crisis.
Okay.
Maybe a last question.
Next question is from Mr. Harry breach from Stifel. Please go ahead.
Yes. Thank you. Thank you for taking my question good evening Guillermo Dominic.
And Im just just two simple ones hopefully.
Maybe the last the last couple of months since we spoke for the full year earnings clearly there have been one or two geopolitical events.
Which can change how customers think about fleet planning.
So can you can you tell us how youre seeing the current level of sales campaign activity for Airbus.
And then completely separately.
Just thinking about the inventory of completed but undelivered aircraft.
Dominic.
Mass is backed out of the mess.
At times, but if I think about the number you talked about in February , which I think was a little bit under 100 and the deliveries in the first quarter and your production should we be thinking about around 100 units at the moment that are completed but undelivered.
And can you give us your best idea today, given what's changed in recent months about when that 100 units might return to a more normal level, which I think in the past you guys have said might be closer to sort of 30 or 40 aircraft.
So Dominion <unk>, Australia.
Second question and I will take the first one and then we'll be quick on the first one the momentum on the sales campaigns remains very strong.
Yes.
Events have taken place it's.
We continue to receive very strong momentum.
So on this undelivered finish.
Finished aircraft, yes deliberately didn't cutoff.
No.
Extremely vocal about that as we progress because it was really a thing that was making sense to comment when the demand side of the problem for taking delivery now it will come into the supply side and that means that in some aircraft you have basically invest all the capital in that close to finished but don't qualify for the category anymore, because maybe it part is missing.
So with the slight that becoming more of an issue. The number of the complex meaningless I think you should really focus them on the inventories be disclosing all of that.
It has not materially changed I would say from the levels, we had in prior quarters.
This conference call for this time.
Do you have any further questions. Please.
Guests tell myself.
We will get back to you as soon as possible. Thank.
Thank you and I'm looking forward to speaking to you again.
Thank you everyone Bye bye have a good day or good evening. Thank you.
Ladies and gentlemen, this concludes the conference call. Thank you all for your participation you may now disconnect.
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