ii view: Airbus underlines confident outlook with dividend hike
Rightsizing its Space related business and with a commercial aircraft order book providing a decade of future production. We assess prospects.
20th February 2025 16:03
by Keith Bowman from interactive investor
Full-year results to 31 December
- Revenues up 6% at €69.2 billion
- Adjusted profit (EBIT) down 8% to €5.4 billion
- Ordinary dividend up 11% to €2 per share
- Special dividend unchanged from a year ago at €1 per share
Chief executive Guillaume Faury said:
“We achieved strong order intake across all businesses in 2024, with a book-to-bill well above 1, confirming the solid demand for our products and services. We delivered on our 2024 guidance in what was a testing year for Airbus.
“We refocused our efforts on key priorities, notably the production ramp-up and the transformation of Defence and Space. We continue to pursue profitable growth and our decarbonisation ambition.”
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ii round-up:
Airbus SE (EURONEXT:AIR) today detailed full-year 2024 profits marginally shy of City forecasts, but pointed to an increased dividend payment as underlining management’s ongoing confidence in the outlook.
Adjusted profit fell 8% year-over-year to €5.4 billion, hindered by charges made to restructure and right-size the space and defence business given reduced demand for telecommunication satellites. Analysts had expected profits of €5.5 billion. The ordinary dividend rose 11% from 2023 to €2 per share. Airbus continues to funnel surplus cash back to shareholders via special dividends, with €1 per share payment declared for this latest financial year.
Shares in the CAC-40 company fell 2% in European trading having come into these latest results up around 16% over the last year. Arch-rival Boeing Co (NYSE:BA) is down 9% over that time.
Airbus makes commercial passenger planes such as its popular A320 series used by airlines such as easyJet (LSE:EZJ) and British Airways owner International Consolidated Airlines Group SA (LSE:IAG), along with military and space related equipment and helicopters.
Airbus expects commercial aircraft deliveries of 820 planes in 2025, up from 766 the year before, driving adjusted profit up to €7 billion.
Core commercial aircraft revenues climbed 6% year-over-year to €50.6 billion. Helicopter revenues improved 8% to €7.9 billion, with Space and Defence sales up 5% to €12.1 billion, aided by a Spanish order for an extra 25 Eurofighters.
Hindered by charges for job losses, the Space and Defence business reported a 2024 adjusted loss of €656 million, countering profits of €5.1 billion for commercial planes and €818 million for helicopters.
Broker Morgan Stanley reiterated its ‘overweight’ stance on Airbus shares post the results. First-quarter results are scheduled for 30 April.
ii view:
Airbus employs over 150,000 people, largely across Europe. Deliveries of its A320 narrow-bodied single aisle aircraft and designed for short-haul flights dominated during 2024 at 602. Deliveries for the ultra-budget A220 single aisle plane came in at 75, while those for the wider-body twin aisle A330 and A350 planes totalled 89 planes.
For investors, supply chain issues during the pandemic and current geopolitical tensions continue to impact production. Costs for businesses generally remain elevated. Skilled worker shortages persist, while a forecast price/earnings (PE) ratio above the three-year average may suggest the shares are not obviously cheap.
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More favourably, challenges at rival Boeing are offering opportunities for Airbus which delivered to 86 customers worldwide in 2024. Uncertainties regarding required charges for the Space and Defence business are now behind it. Pressure for airline customers to reduce their environmental impact via more efficient aircraft is ongoing, while a forecast dividend yield of around 1.3% compares to a suspended payout at Boeing.
In all, and while exposure to the volatile airline industry should not be forgotten, Airbus’ position as one of only two major global commercial aircraft makers continues to justify its place in many long-term focused investor portfolios.
Positives:
- A duopoly passenger plane supplier
- Diversity of product and geographical region
Negatives:
- Supply chain challenges
- Concerns for aviation’s impact on climate change
The average rating of stock market analysts:
Buy
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