ii view: Airbus restarts the dividend payment

Airbus remains the world’s biggest plane maker for the third year running. Buy, sell, or hold?

Full-year results to 31 December 2021

• Revenue up 4% to €52.15 billion
• Adjusted profit up 185% to €4.86 billion
• Net cash held up 77% to €7.64 billion
• Dividend payment of €1.50 per share (2020: Nil)

2022 Guidance:

• Expects commercial aircraft deliveries of 720
• Forecasting adjusted profit of €5.5 billion

Chief executive Guillaume Faury said:

“2021 was a year of transition, where our attention shifted from navigating the pandemic towards recovery and growth. Thanks to the resilience and efforts of our teams, customers and suppliers, we delivered remarkable full-year results.” 

ii round-up:

Plane maker Airbus (EURONEXT:AIR) today reported a strong recovery in adjusted profit as a recovery from the pandemic remained ongoing and it continued to bear down on costs. 

Adjusted profit rose 185% to €4.86 billion as the Toulouse-headquartered company delivered 611 commercial aircraft during 2021, up from 2020’s 566 planes. A dividend of €1.50 per share was declared, the first in two years. 

Airbus shares rose by more than 1% in European trading having more than doubled from pandemic-induced lows back in March 2020. Shares for US rival Boeing (NYSE:BA) are up by a similar amount over that time, while shares for Airbus customer easyJet (LSE:EZJ) have climbed by just under 60%. 

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Airbus expects commercial aircraft deliveries of 720 during 2022, still below 2019’s pre-pandemic outcome of 863 aircraft. Management forecasts an adjusted 2022 profit of €5.5 billion. 

The Paris-listed company reaffirmed plans to increase production of its best-selling A320neo family. Airbus remains the world’s biggest plane maker for the third year running. 

Its helicopters business delivered 338 units during the year, up from 300 in 2020, with revenues climbing 4% aided by growth in services sales. 

Sales for its Defence and Space business retreated 2%, largely due to Military Aircraft, although partially offset by Space Systems. A total of eight A400M military transport aircraft were delivered in 2021.

ii view:

Airbus operates across the three divisions of Commercial aircraft, Space and Defence and Helicopters. It employs around 126,000 people in more than 150 locations globally and has around 12,000 direct suppliers. 

For investors, the volatile nature of the airline industry it manufactures for leaves Airbus cyclical in nature. Costs for materials are rising generally across industry, while potential for supply chain disruption remains. 

More favourably, the biggest restructuring in Airbus’s history is clearly removing costs. Pressure for airline customers to reduce their environmental impact via more efficient aircraft is ongoing. And the restarting of a dividend payment suggests confidence in the outlook. For now, and while some caution is sensible, a consensus analyst estimate of fair value of over €140 per share gives room for longer-term optimism. 

Positives: 

• A focus on cost savings
• Net cash held of €7.64 billion

Negatives:

• Pandemic and economic-clouded outlook
• Concerns for aviation’s impact on climate change

The average rating of stock market analysts:

Strong buy