Tier 1 supplier in Aerospace, Defence & Security

Transcription

1 Tier 1 supplier in Aerospace, Defence & Security Investor roadshows / December 2015 / 0 / INVESTOR Q3 REVENUE ROADSHOW 2011 / OCTOBER / DECEMBER 21, / /

2 Tier 1 supplier in Aerospace - Defence - Security 2014 revenue by activities Aircraft Equipment 29% FY 2014 (adjusted) Revenue 15,355M Aerospace Propulsion 53% 15.4Bn 8% 10% Defence Security Recurring op. income 2,089M (13.6% of revenue) Net income - Group share 1,248M ( 3.00/share) Free Cash Flow 740M Net debt position (Dec. 31) 1,503M (23% gearing) 1 /

3 Leading market positions Aerospace Defence Security #1 worldwide Turbofans for single aisle commercial aircraft (1) Helicopter turbines Landing gear, wheels and carbon brakes (2) Aircraft electrical interconnection system Power transmission Space launchers (3) #2 worldwide Engine nacelles #4 worldwide Military engines #1 Europe Optronic systems Inertial navigation systems #1 worlwide Flight control systems for helicopters Engine control systems (4) #1 worldwide Biometric ID solutions Automated multi-biometric ID systems CTX (tomographic explosive detection) systems for checked baggage #4 worldwide Smart cards ~80% of revenue coming from civil activities (1) Through CFM International (50-50 JV with GE) (2) Aircraft >100 passengers (3) Through Airbus Safran Launchers (JV with Airbus) (4) For civil aircraft, in partnership with BAE systems 2 /

4 / 4 key themes / Q highlights & FY 2015 outlook Positive trends in civil aftermarket LEAP update Capital allocation in line with Group strategy 3 /

5 Q and 9m 2015 financial highlights 10, % 12,544 3, % 4,141 ( M) ( M) Q Q m m 2015 Strong revenue growth in Q3 driven by continuing momentum in Propulsion and strength in Security. Services in Propulsion (up 19.0%) and Equipment (up 24.1%) continued to drive revenue growth. Security confirmed a strong revenue trajectory (+29%) as all businesses grew. Sales in Defence increased slightly. Civil aftermarket was up 18.5% in USD terms in Q3 and 24.4% year to date. Growth continues to be driven by overhaul activity for second generation CFM56 and GE90 engines in the context of a favourable environment for airline customers. 4 /

6 Q revenue by activity Adjusted data (in Euro million) Q Q Change reported Change organic Aerospace propulsion 1,944 2, % 5.7% Aircraft equipment 1,021 1, % (0.8)% Defence % (1.2)% Security % 17.7% Others - 1 Na Na Total revenue 3,589 4, % 4.6% Main growth drivers Significant positive currency impacts from USD Continued momentum in Aerospace services: Propulsion: services up 19% (in ), driven by civil aftermarket (up 18,5% in USD). Healthy contribution from helicopter turbines services Equipment: services up 24% (in ) driven by landing gear aftermarket and continuing momentum in carbon brakes Ramp up of A350 programme (landing gear, wiring) Security: all activities contributing to strong, broad based growth Defence : growth in Optronics Offsetting impacts Lower helicopter turbines volumes due to production delays and soft OE demand Nacelles: lower deliveries of A330 thrust reversers; lower A380 nacelle deliveries 5 /

7 9M 2015 revenue by activity Adjusted data (in Euro million) 9m m 2015 Change reported Change organic Aerospace propulsion 5,707 6, % 7.8% Aircraft equipment 3,158 3, % (1.0)% Defence % (1.5)% Security 1,090 1, % 11.2% Others 2 3 Na Na Total revenue 10,797 12, % 4.9% 6 /

8 Aerospace OE* / Services revenue split Revenue Adjusted data (in Euro million) Propulsion % of revenue Equipment % of revenue Q Q % change OE Services OE Services OE Services 921 1,023 1,002 1, % 19.0% 47.4% 52.6% 45.2% 54.8% % 24.1% 71.6% 28.4% 69.5% 30.5% Revenue Adjusted data (in Euro million) Propulsion % of revenue Equipment % of revenue 9m m 2015 % change OE Services OE Services OE Services 2,820 2,887 3,050 3, % 26.6% 49.4% 50.6% 45.5% 54.5% 2, ,544 1, % 19.3% 72.1% 27.9% 70.8% 29.2% (*) All revenue except services 7 /

9 Silvercrest Major tests successfully performed : icing, bird ingestion 11 engines ground tested 6 engines flight tested on flying test bed Gulfstream II 3,200 hours of accumulated testing (310 hours on FTB) Additional development needed to meet operational life and performance (fuel) requirements Programme-related assets of 696M on balance sheet Support for these assets to be tested during preparation of the 2015 annual accounts Potential contractual penalties during the development phase are capped and entirely covered by provisions Flight test of Silvercrest on FTB Ground test of Silvercrest 8 /

10 FY 2015 outlook confirmed Adjusted revenue to increase by a percentage in high single digits at an estimated average spot rate of USD 1.20 to the Euro. If the average spot rate of USD 1.12 to the Euro remain throughout 2015, revenue would consequently grow by a percentage in low double digits. Adjusted recurring operating income expected to increase by a percentage in the mid-teens at a hedge rate of USD 1.25 to the Euro. Free cash flow expected to represent 35% to 45% of the adjusted recurring operating income subject to usual uncertainties on the timing of advance payments. Safran s 2015 outlook is applicable to the Group s current structure and does not take into account any potential impact in 2015 of notably the finalisation of the regrouping of its space launcher activities with those of Airbus Group in their joint venture, Airbus Safran Launchers. 9 /

11 / 4 key themes / Q highlights & FY 2015 outlook Positive trends in civil aftermarket LEAP update Capital allocation in line with Group strategy 10 /

12 9m 2015: positive trends in Civil aftermarket Civil aftermarket up 24.4%* in 9m 2015 Q %; Q %; Q % year-over-year More, higher-value shop visits on recent CFM56 Positive trend in GE90 aftermarket Favourable environment Passenger demand expected to be up 6.7% in 2015 according to IATA Maintenance, Saint-Quentin- en-yvelines, France Lower oil price Confirms CFM56 fleet potential for spares revenue to double from 2010 dip before 2020e Civil aftermarket to grow by a percentage in the high-teens in 2015 Q will face a tougher comparison base Maintenance, Casablanca, Morocco *In USD 11 /

13 Forecasting spare parts business opportunity: the new behaviour model Dedicated project decided in 2011 Analysis concluded that maintenance behaviour could differ from one airline to another, impacting new spare parts sales Segment behaviour also varies according to economic context and air traffic New model based on airlines segmentation Differentiate segments according to maintenance behaviour Simulate airlines reaction to changing macro-economic environment Air traffic forecast Economics Airlines maintenance behaviour Customer Maintenance contracts Theoretical aging Engine constraints 12 /

14 Forecasting spare parts Outcome of the new model (CFM56 spare parts forecast) Expected CFM56 spare parts revenue profile 2010 dip 2x 3x CFM56 spare parts revenue to increase consistently and to peak by around 2025E Revenue should double from 2010 dip before 2020E 1 st generation CFM56 spare parts potential to fade out within 5 years from now The new model confirms 2025 horizon Behaviour model adds increased visibility on the short term 13 /

15 CFM56: strong prospects until 2025 and beyond CFM56 spare parts revenue to peak by around 2025E CFM56 active installed fleet to peak around 2018E at ~26,800 engines (~32,000 deliveries) CFM Gen 1 CFM Gen 2 Global spare parts revenue (in $ base in 2000) 14 /

16 Service agreements A variety of aftermarket options tailored to needs T&M: Time & Material CFM is paid at the time of the actual shop visit on the basis of an agreed-upon scope of material and labour income, expenses and cash impact coincide MSA: Material Service Agreement CFM guarantees commercial conditions of parts supply to airline/mro providers RPFH: Rate Per Flight Hour CFM receives a fixed sum per flight hour based on estimated cost to perform engine maintenance to meet performance and availability guarantees decoupling of revenue & cash-in with costs & cash-out ESPO (Engine Service Per Overhaul): fraction of revenue booked progressively and remainder booked at the time of SV ESPH (Engine Service Per Hour): revenue booked progressively Service programmes aiming to support airlines on a predictable cost per engine flight hour basis, to enable accurate forecasting of operating costs, reduced cost of ownership, and improved asset utilisation 15 /

17 Slow transition in business model Active installed fleet of engines in 2020E (estimate) ~25,000 T&M RPFH Strong adoption of LEAP customers of RPFH but LEAP fleet will represent ~10% of combined CFM fleet (by 2020E) CFM56 is mostly based on Time & Material ~2,700 ~3,000 CFM56 GE90 LEAP Therefore, no material change expected from RPFH accounting by 2020E 2015 to 2025: P&L will remain dominated by current model Impact of RPFH will be gradual 16 /

18 / 4 key themes / Q highlights & FY 2015 outlook Positive trends in civil aftermarket LEAP update Capital allocation in line with Group strategy 17 /

19 Excellent progress of LEAP LEAP development proceeding according to plan LEAP-1A: Joint EASA / FAA certification achieved. On track for commercial deliveries in LEAP-1B: FTB campaign completed this summer after 50 flights totaling 268 hours. Preparing for first flight of the 737MAX in early 2016 LEAP-1C: Successful installation of the two Integrated Propulsion Systems completed on time in September to support COMAC roll-out planned by year end LEAP performance in line with roadmap, fully confident to fulfill commitments Preparing for production readiness First commercial deliveries of LEAP in 2016 LEAP supply chain mostly based on CFM56 supply chain Investing in new and enhanced facilities, including 2 new assembly lines dedicated to LEAP in Villaroche, France 2 nd A320neo powered by LEAP-1A Hot weather campaign: A320neo powered by LEAP-1A LEAP on track for EIS as planned High altitude campaign: A320neo powered by LEAP-1A 18 /

20 LEAP development on track 19 /

21 Outstanding commercial success for LEAP Market share exceeding 70% on next-generation single-aisle commercial jets: More than 9,600 engine orders and commitments at September 30, % market share on the A320neo Comac 507 First flight of LEAP-1A powered A320neo LEAP 4,776 aircraft* 74% 737 MAX 2,952 A320neo 1,317 * Excluding spare engines First flight of LEAP-1B on flying test bed 20 /

22 Transitioning to LEAP # deliveries 1,560 1,800+ Increasing assembly rates for narrowbodies Faster LEAP ramp up Outstanding commercial success: More than 9,600 engines in backlog (Sept 30, 2015) 1,800+ LEAP in 2020 Higher CFM56 volumes over Strong backlog of 3,800 engines (Sept 30, 2015) reflects sustaining demand and healthy order intake rate YTD Increasing market share on A320ceo (e) (e) (e) (e) (e) (e) Capturing positive momentum of narrowbody segment 21 /

23 / 4 key themes / H highlights & upgraded FY 2015 outlook Positive trends in civil aftermarket LEAP update Capital allocation in line with Group strategy 22 /

24 Cash allocation in line with Group strategy Business Research & Development Create a distinctive difference through technological innovation (long term) Spending reflects winning some attractive new business (medium term) Capital expenditure Modernize existing sites and strengthen the international scope Acquisitions Accelerate or establish positions in critical areas at justified price Shareholders Dividend payments Grow cash returns to shareholders 40% payout of adjusted net income since /

25 Acquisitions: objectives & criteria Buy installed base & customer access Buy technology assets HLP Electrical Power Systems Colombia/Peru RTM322 programme Performance M&A financial criteria Cover cost of capital within 3 years (RoCE) A deal should be EPS accretive in year 1 ideally. If not, in year 2 ROI in the range of 10 to 12% Post-tax cost of capital of 8% (aerospace & defence) and 9.5% (security) Balance sheet Net debt/ebitda around 2.0x. 2.5x max at peak for a limited period of time Interest cover ratio at 6x (= EBIT / Interest expense) 24 /

26 2015 dividend Dividend per share ( ) Final Dividend distribution ( M) Interim dividend distribution ( M) Total dividend distribution ( M) /share dividend for 2014; almost doubled in 3 years 25 /

27 / Annexe / Additional information 26 /

28 Quantities of major aerospace programs Number of units delivered Q Q % 9m m 2015 % CFM56 engines % 1,174 1,214 3% High thrust engines (3)% % Helicopter engines (29)% (13)% M88 engines % 18 8 (56)% 787 landing gear sets % % A350 landing gear sets 0 8 na 0 20 na A380 nacelles (22)% (17)% A330 thrust reversers (8)% (11)% A320 thrust reversers % % Small nacelles (biz & regional jets) % % 27 /

29 Fx hedging: $20.8bn Hedge portfolio* (Oct 15, 2015) Yearly exposure: $7.1bn to $8.0bn Increasing level of net USD exposure for due to strong growth of businesses with exposed USD revenue 2016 & 2017 fully hedged ($bn) 2018 $3.9bn achieved at $1.08 through forward sales and short dated knock out option strategies to rise to a maximum of $8.0bn at an improved target rate below $1.20 through accumulators as long as /$<1.28 up to end 2016 Decrease of firm portion to $3.9bn reflecting active portfolio management to benefit from low spot rate through options /$ hedge rate Achieved Knock out options barriers set at various levels between $1.20 and $1.45 with maturities up to 2 years Target <1.20 *Approx. 45% of Safran US$ revenue are naturally hedged by US$ procurement 28 /

30 H results by activity (In M) H Propulsion Equipment Defence Security Holding & others Revenue 8,403 4,486 2, Year-over-year growth in % 16.6% 19.2% 13.0% 5.5% 22.6% - Recurring operating income 1, (53) as a % of revenue 13.9% 21.0% 8.2% 2.4% 7.5% - 29 /

31 H income statement (In M) * Based on 416,440,876 shares ** Based on 416,432,773 shares H restated H Revenue 7,208 8,403 Other recurring operating income and expenses (6,270) (7,248) Share in profit from joint ventures Recurring operating income % of revenue % 1, % Total one-off items (10) (4) Profit from operations % of revenue % 1, % Net financial income (expense) (11) (39) Income tax expense (304) (353) Share in profit from associates 7 4 Gain on disposal of Ingenico Group shares Profit for the period attributable to non-controlling interests (22) (34) Profit attributable to owners of the parent EPS (in ) * 1, ** Of which cost of debt of (10)M Apparent tax rate of 31.3% Post-tax capital gain from placements of Ingenico Group shares Including 1.00 per share due to the sale of Ingenico Group shares H net profit up 89% (including the gain on Ingenico Group shares) 30 /

32 Research & Development (In M) H H Change Total R&D 982 1, External funding (273) (340) 67 Total self-funded cash R&D (28) as a % of revenue 9.8% 8.1% (1.7) pt Tax credit (73) (76) 3 Total self-funded cash R&D after tax credit (31) Gross capitalized R&D (355) (243) 112 Amortised R&D P&L R&D in recurring EBIT Decrease of self-funded cash R&D effort at 8.1% of sales Self-funded R&D declined notably for LEAP and A350 Falling capitalized costs, as expected, driven by lower LEAP and A350 spending; Silvercrest fully expensed since 1 April 2014 as a % of revenue 4.4% 4.8% 0.4 pt 31 /

33 Free Cash Flow (in M) H restated H Adjusted net profit 616 1,164 Depreciation, amortization and provisions Others 123 (127) Cash from operating activities 1,115 1,495 Change in WC (294) (529) Capex (tangible assets) (299) (359) Capex (intangible assets) (481) (511) Free cash flow Of which amortization of tangibles and intangibles for 302M and provisions (net) for 140M Increase in working capital requirements due to rising production rates in aerospace markets and impact of a stronger $ Lower capitalized R&D Higher tangible and intangible (ex-r&d) investments due to the transition to new engine programs 32 /

34 Net debt position (in M) Net debt at Dec 31, 2014 (1,503) Cash flow from ops 1,495 Change in WC (529) R&D and Capex Net debt at June 30, 2015 (1,499) Cash flow from operations equals 1.2x EBIT Increase in WC requirements to cope with rising production rates in aerospace markets and impact of stronger dollar 2014 final dividend of 267M ( 0.64 per share) to parent holders (870) Acquisitions/Divestments & Others include: 96M Free Cash Flow Dividends* (285) Acquisitions/ Divestments & others M of proceeds from the sale of Ingenico Group shares (84)M of foreign exchange differences on USPP * Includes (18)M of dividends to minority interests 33 /

35 Gross debt and liquidity Gross debt repayment schedule (June 30, 2015) 1,574M 478M 1,255M Gross debt 3,307M Cash & equiv. 1,789M + Debt hedging instruments 19M Net debt 1,499M April 2014 private placement - 200M, maturity 2024, 2.93% yield, no covenants USPP - $1.2bn, maturities 2019, 2022 & 2024; subject to 1 covenant (net debt/ebitda <2.5) Committed & undrawn financing resources: 2.55bn; subject to 1 covenant (net debt/ebitda <2.5) Credit line - 950M, maturity Oct Credit line - 1,600M, maturity Dec /

36 Balance sheet highlights (In M) Goodwill Dec 31, 2014 restated* 3,420 June 30, ,554 OWC increased by 450M at 1,475M (8.9% of LTM revenue) Tangible & Intangible assets 8,464 9,023 Investments in joint ventures and associates Other non current assets Operating Working Capital Net cash (debt) ,025 (1,503) 727 1,374 1,475 (1,499) Increased provisions mostly linked to higher level of activity on service contracts Shareholders equity - Group share 6,266 6,103 Minority interests Non current liabilities (excl. net cash (debt)) 1,549 1,540 Provisions 3,329 3,455 Other current liabilities / (assets) net 1,482 3,302 *Restated for the adoption of IFRIC /

37 Definition Civil aftermarket (expressed in USD) This non-accounting indicator (non audited) comprises spares and MRO (Maintenance, Repair & Overhaul) revenue for all civil aircraft engines for Snecma and its subsidiaries and reflects the Group s performance in civil aircraft engines aftermarket compared to the market. 36 /

38 Disclaimer The forecasts and forward-looking statements described in this document are based on the data, assumptions and estimates considered as reasonable by the Group as at the date of this document. These data, assumptions and estimates may evolve or change as a result of uncertainties related in particular to the economic, financial, competitive, tax or regulatory environment. The occurrence of one or more of the risks described in the registration document (document de référence) may also have an impact on the business, financial position, results and prospects of the Group and thus affect its ability to achieve such forecasts and forward-looking statements. The Group therefore neither makes any commitment, nor provides any assurance as to the achievement of the forecasts and forward-looking statements described in this document 37 /

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