(News Bulletin 247) – The aircraft manufacturer published adjusted operating income and cash flow significantly below consensus, penalized by several exceptional items. But the group ensures that it is in line with its own forecasts and confirms its annual objectives.

If Airbus has had a good 2024 year on the stock market for the time being (+10.9% since January 1 compared to +6.6% for the CAC 40), helped by the numerous setbacks of Boeing which strengthen its appeal on the stock market, its first quarter results are nothing to write home about.

The action of the aeronautics and defense group also dropped 2.3% around 10:50 a.m. this Friday, accusing the sharpest decline in the CAC 40.

Airbus has published a “sluggish start to the year”, notes Oddo BHF. From January to March, revenues of the former EADS reached 12.83 billion euros, up 9%. The company benefited from stronger aircraft deliveries in its commercial division than in the same period of 2023, with 142 aircraft delivered compared to 127 a year earlier.

But adjusted operating profit, a key measure of the group’s profitability, stood at 577 million euros, down 25% over one year. Free cash flow before customer financing, traditionally negative over the first three months of the year, stood at -1.79 billion euros.

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Exceptional elements

Airbus only slightly missed the consensus on its turnover (12.87 billion euros). On the other hand, the failure is much more significant both in terms of profitability and cash, since analysts expected an adjusted operating profit of 789 million euros and a cash disbursement limited to 1.3 billion euros.

The group’s financial director, Thomas Toepfer, cited several reasons for the discrepancy during a conference call with journalists. First of all, Airbus suffered an exceptional impact linked to the increase in the Airbus employee shareholding plan, which was a great success. This weighed around 100 million euros on adjusted operating profit.

Then, Airbus suffered from unfavorable effects linked to currency hedging on the euro-dollar. Last reason cited by Thomas Toepfer: Airbus has, at the end of 2023, “taken a lot of people on board”, and therefore recruited, to ensure the ramp-up of its production. Which logically translates into more costs. Oddo BHF in its note mentions total workforce additions of 12,400 units.

Regarding cash, Thomas Topefer indicated that Airbus had acquired precautionary stocks, which could be considered too high in normal times but are currently adapted in view of the tensions that the company is experiencing in its supply chain. Which could have weighed on cash.

Objectives confirmed

Many exceptional elements therefore, which should not be repeated in the coming quarters. “The failure in operating profit is partly due to non-operational problems, but the quarter remains disappointing nonetheless,” Deutsche Bank nevertheless decides. “Even taking into account all the exceptional items and the ‘forgivable’ things, the first quarter was disappointing,” says UBS.

Royal Bank of Canada also notes that management’s tone on the health of the supply chain turned out to be “more cautious” than it expected.

Thomas Toepfer assured that Airbus was “totally in line with its own forecasts” and thus confirmed its outlook for 2024. The group plans to deliver around 800 commercial aircraft, generating an adjusted operating profit of between 6.5 billion and 7 billion euros. euros and generate free cash flow before customer financing of around 4 billion euros.

Royal Bank of Canada reports that Airbus detailed during its conference how it intends to achieve its annual operating profit target from the first quarter results, “which we believe should address investors’ concerns”, explains the bank . “However, the march for cash flow from the second quarter to the fourth quarter of 2024 represents a greater challenge, in our view,” she adds.

Oddo BHF, for its part, judges that this somewhat dull start to the year masks “unrivaled visibility”. “The first quarter was the quarter suffering from the strongest base effect and the trajectory of production rates is in our eyes increasingly solid,” explains the broker. Jefferies slightly adjusted its target to 190 euros from 195 euros (the current price is around 154 euros) while remaining a purchase.

Note that Airbus, to take into account stronger demand for large aircraft, has increased its medium-term production objective on the A350 program to 12 aircraft per month in 2028 compared to 10 per month in 2026 previously.