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2016-07-21

Dassault Aviation: 2016 first half-year financial release

HALF-YEARLY RESULTS OF DASSAULT AVIATION GROUP

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| H1 2016 H1 2015 |
| Order intake EUR 1,378 million EUR 4,331 million |
| |
| |
| |
| |
| 25 FALCON |
| 22 FALCON 20 FALCON NetJets cancellations |
| 11 FALCON 5X cancellations 24 RAFALE Egypt |
| Net sales EUR 1,662 million EUR 1,675 million |
| |
| |
| |
| |
| 18 FALCON |
| 1 RAFALE France |
| 15 FALCON |
| 4 RAFALE France |
| 3 RAFALE Egypt |
| |
| As at June 30, 2016 As at December 31, 2015 |
| Backlog EUR 13,931 million EUR 14,175 million |
| |
| |
| |
| |
| 91 FALCON |
| 87 FALCON 38 RAFALE France |
| 34 RAFALE France 45 RAFALE Export |
| 42 RAFALE Export |
| |
| H1 2016 H1 2015 |
| Adjusted EUR 185 million EUR 179 million |
|Net Income |
|(*) EUR 21.4 per share EUR 20.1 per share |
| Adjusted 11.1% of net sales 10.7% of net sales |
|net margin |
|(*) |
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(*)
See table of reconciliation between consolidated income and adjusted income in
the appendix.

N.B.: DASSAULT AVIATION recognizes the RAFALE Export contracts in their
entirety (i.e. including the THALES and SNECMA parts), whereas for France,
only the DASSAULT AVIATION part is recognized.

Saint-Cloud, July 21, 2016
- The Board of Directors, chaired today by Mr. Éric Trappier, closed the
financial statements for the first half of 2016. The Statutory Auditors
performed a limited review of these consolidated financial statements and
have expressed an unqualified opinion.

Highlights of the first half of 2016 mainly included:

Order intake

Consolidated order intake in the first half of 2016 amounted toEUR 1,378
million
, compared to EUR 4,331 million in the first half of 2015, which was marked by
the Egyptian order for 24 RAFALE.

Exports accounted for 64%
compared to 95% in the first half of 2015.

FALCON programs

FALCON consolidated order intake amounted toEUR
778 million
, compared to EUR 610 million in the first half of 2015.
In the first half of 2016, we recorded, in particular,22 FALCON orders
and
11 FALCON 5X cancellations,
as a result of delays on the SilverCrest engine by SAFRAN AIRCRAFT ENGINES.
Order intake in the first half of 2015 totaled 25 FALCON, and 20 FALCON
NetJets were canceled.

DEFENSE programs

DEFENSE order intake totaledEUR 600 million
in the first half of 2016, compared to EUR 3,721 million in the first half of
2015.
The decrease in DEFENSE Export order intake (EUR 146 million
in the first half of 2016, compared to EUR 3,524 million in the first half of
2015) was mainly due to the Egyptian order for 24 RAFALE in the first half of
2015.
The increase in DEFENSE France order intake (EUR 454 million
in the first half of 2016, compared to EUR 197 million in the first half of
2015) was primarily due to the contract for the MIRAGE 2000D upgrade.

Net sales

Consolidated net sales in the first half of 2016 wereEUR 1,662 million
, compared to EUR 1,675 million in the first half of 2015. Exports accounted
for81%
of net sales.

FALCON programs

FALCON net sales in the first half of 2016 totaledEUR
853 million
, compared to EUR 919 million in the first half of 2015.
15
new aircraft
were delivered in the first half of 2016, compared to 18 in the first half of
2015.
FALCON net sales accounted for 51% of consolidated net sales in the first half
of 2016.

DEFENSE programs

DEFENSE net sales totaledEUR 809 million
, compared to EUR 756 million in the first half of 2015 (which included the
delivery of the Indian MIRAGE 2000 modernization works).
4 RAFALE
were delivered to France and3 RAFALE
to Egypt in the first half of 2016, compared to 1 RAFALE to France in the
first half of 2015.

xxxxx

The "book to bill" ratio (order intake / net sales) was 0.83.

Backlog

The consolidated backlog at June 30, 2016 wasEUR 13,931 million
, compared to EUR 14,175 million at December 31, 2015, including:

* 87 FALCON (91 at end-2015),
* 34 RAFALE France (38 at end-2015),
* 42 RAFALE Export (45 at end-2015).

Operating income

Consolidated operating income in the first half of 2016 wasEUR
125 million
, compared to EUR 144 million in the first half of 2015.
The operating margin was7.5%
, compared to 8.6% in the first half of 2015.

The decrease was due to:

* competitive pressure on FALCON sales prices, which intensified between the
two half-years,
* the adverse impact of the conversion into EUR of USD items in the balance
sheet in the first half of 2016 (USD/EUR 1.11 at June 30, 2016, compared to
USD/EUR 1.09 at December 31, 2015) whereas it was favorable in the first
half of 2015 (USD/EUR 1.12 at June 30, 2015, compared to USD/EUR 1.21 at
December 31, 2014). The change in this conversion impacts the income
statement, without being indicative of the financial performance over the
period,
* partially offset by the decrease in the weighting of self-financed R&D.

Adjusted financial income

Adjustedfinancial income in the first half of 2016 wasEUR 17 million
, comparable to that in the first half of 2015 (EUR 16 million).

Thales contribution

The contribution of THALES adjusted net income, before amortization of the
Purchase Price Allocation, wasEUR 89 million
in the first half of 2016, compared to EUR 72 million in the first half of
2015.

Adjusted net income

Adjustednet income in the first half of 2016 wasEUR
185 million
, compared to EUR 179 million in the first half of 2015. Theadjustednet margin
was11.1%
in the first half of 2016, compared to 10.7% in the first half of 2015.

N.B.: IFRS net income in the first half of 2016 was EUR 238 million, compared
to EUR -132 million in the first half of 2015. For the record, the loss in
the first half of 2015 was wholly due to the change in the market value of
foreign exchange instruments which did not qualify for hedge accounting: EUR
+69 million in the first half of 2016, compared to EUR -280 million in the
first half of 2015. These instruments are used to hedge commercial flows;
DASSAULT AVIATION neutralizes this change, as it considers that gains or
losses on hedging should impact income at the same time as the commercial
flows occur.

Balance sheet

Total equity amounted toEUR 3,254 million
at June 30, 2016, compared to EUR 3,771 million at December 31, 2015, a
reduction of EUR 517 million.

This decrease was mainly due to the buyback of 502,282 treasury shares for EUR
477 million (for the record, at June 30, 2016, the Group held 912,253
treasury shares, recognized as a deduction from equity for EUR 879 million).

Borrowings and financial debts amounted toEUR 1,192 million
at June 30, 2016, compared to EUR 1,210 million at December 31, 2015. They
include:

* the bank borrowings subscribed in 2014 and 2015 for a total of EUR 1,000
million. It should be noted that the Company did not subscribe any new bank
loan for the purpose of share buybacks in the first half of 2016,
* locked-in employee profit-sharing funds.

At June 30, 2016, inventories and work-in-progress increased by EUR 546
million. They thus amounted toEUR 3,974 million
at June 30, 2016, compared to EUR 3,428 million at December 31, 2015. This
increase was due to the rise in FALCON work-in-progress, as a result of the
level of deliveries during the half-year.

Advances and progress payments received on ordersnetof advances and progress
payments paid rose EUR 660 million at June 30, 2016 mainly due to RAFALE
Export downpayments.

Derivative financial instruments had a market value of EUR -380 million at
June 30, 2016 compared to EUR -506 million at December 31, 2015. The
resulting positive change of EUR +126 million was mainly due to the trend in
the USD/EUR exchange rate at June 30, 2016 (USD/EUR 1.11 compared to USD/EUR
1.09 at December 31, 2015).

Cash

The Group uses a specific indicator, referred to as "Available cash", which
reflects the total liquidity available to the Group, net of any financial
debts. It covers the following balance sheet items:

* cash and cash equivalents,
* available-for-sale marketable securities (at their market value),
* financial debts.

Consolidated Available Cash amounted toEUR 2,432 million
at June 30, 2016 compared to EUR 2,885 million at December 31, 2015, down EUR
453 million.

This decrease was mainly explained by:

* the treasury share buyback totaling EUR 477 million,
* the increase in inventories and work-in-progress of EUR 546 million,

Författare Hugin

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