Interactive Investor

ii view: Airbus details special dividend following record orders

Looking to deliver even more passenger planes in 2024 than 2023. We assess prospects for Boeing's rival plane maker.

16th February 2024 15:52

Keith Bowman from interactive investor

Full-year results to 31 December

  • Revenue up 11% to €65.4 billion
  • Adjusted profit up 4% to €5.8 billion
  • Special dividend of €1.00 per share
  • Ordinary dividend unchanged at €1.80 per share
  • Net cash up 14% to €10.7 billion

Chief executive Guillaume Faury said:

“In 2023 we recorded strong order intake across all our businesses and we delivered on our commitments. This was a significant achievement given the complexity of the operating environment. 

“We will continue to invest in our global industrial system, while progressing on our transformation and decarbonisation journey. Our dividend proposals are a reflection of the strong 2023 financials, our growth prospects in 2024 and balance sheet strength.”

ii round-up:

Plane maker Airbus SE (EURONEXT:AIR) detailed record order intake during 2023 and said it was confident in both its balance sheet and prospects for 2024, underpinning a special dividend payment. 

Airline industry demand following the pandemic fed into a more than doubling of annual new orders, taking its order book up by almost a quarter year-over-year to €554 billion, pushing revenue up 11% to €65.4 billion. A special dividend of €1.00 per share is on top of an unchanged ordinary payment of €1.80 per share. 

Airbus shares drifted lower in post results trading having come into this latest update higher by a quarter over the last year. That compares to loss of 7% for American arch-rival Boeing Co (NYSE:BA), hit recently by quality control issues following the blowout of an aircraft door mid-flight.

Airbus makes commercial passenger planes such as its popular A320 series along with military and space related equipment and helicopters. Headline profit rose 4% to €5.8 billion, while profit after exceptional items and including a €0.6 billion in relation to its space related business, fell 14% to €4.6 billion. 

Commercial aircraft deliveries of 735 in 2023 was up from 611 in 2022, with management expecting to deliver 800 passenger planes in 2024 - shy of analyst forecasts of 813 aircraft. 

Airbus expects adjusted headline profit for 2024 to rise to between €6.5 billion and €7 billion, marginally short of forecasts for €7.2 billion. 

Net cash for the Dutch headquartered company climbed to €10.7 billion from €9.4 billion in 2022. 

Broker Morgan Stanley reiterated its ‘overweight’ stance on the shares post the results, summarising management’s 2024 forecasts as ‘conservative.’  

ii view:

Started in the year 2000, Airbus today employs over 145,000 people. Commercial aircraft generate most of its sales at just over 70%, followed by Space and Defence and including fighter jets at almost a fifth and helicopters, previously called Eurocopter, the balance of around a tenth.  

For investors, heightened borrowing costs and a likely return to more normal travel patterns following a post pandemic boom offer caution. Conflict in the Middle East could yet widen, costs for businesses generally remain elevated, while some supply chain challenges persist. 

On the upside, challenges for rival Boeing may, at least for now, help push new airline orders Airbus's way. Sizeable costs have been removed via a major restructuring following the pandemic, pressure for airline customers to reduce their environmental impact via more efficient aircraft is ongoing, while elevated net cash could see the announcement of a share buyback programme. 

For now, and while some caution looks sensible, its place as one of only two global passenger aircraft makers, combined with a robust order book and historic outperformance versus Boeing, is likely to keep the attention of investors.  

Positives: 

  • A duopoly passenger plane supplier
  • Net cash held of €10.7 billion

Negatives:

  • Uncertain economic outlook
  • Concerns for aviation’s impact on climate change

The average rating of stock market analysts:

Buy

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