Full-year 2013 Earnings - February 20, 2014 - Safran
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Full-year 2013 Earnings
/ February 20, 2014 /
0 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
/ 01/
FY 2013 Highlights
Jean-Paul HERTEMAN - Chairman & CEO
1 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
FY 2013 financial highlights
Growing adjusted revenue with strong Adjusted recurring operating income FCF was 40% of adjusted recurring
performance in Aerospace at 12.2% of revenue operating income
+8.4% 14,695 +23.8%
1,788
13,560
1,444
+26.2%
712
564
(€M) (€M) (€M)
FY 12 FY 13 FY 12* FY 13 FY 12 FY 13
Higher adjusted net profit (group share) Proposed 2013 dividend Low net debt level
at €2.87 per share up 16.7% vs. 2012 (16% gearing)
+16.7% 1.12
+21.9% Dec. 31, 2012 Dec. 31, 2013
1,193
0.96
979 (€M)
€(157)M
(€M) (€)
(932)
FY 12* FY 13 FY 12 FY 13 (1,089)
* Restated IAS19R
2 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
Resolutely pursuing our development strategy
Executing on key engine development programmes: LEAP,
Silvercrest
Major programmes on track, on time and on budget
Turbomeca : a dynamic product portfolio
Arrius 2R, Arrano, Ardiden 3C/3G
Extension to 100% of Turbomeca’s ownership RTM322 programme
Regrouping of electrical power technologies into Labinal Power
Systems (LPS)
a world leader in on-board electrical power systems
reinforcement of LPS with the acquisition of complementary distribution
assets from Eaton
Self-funded R&D of € 1,299 M, in line with guidance
Increase in Propulsion as planned due to ramp-up in LEAP development
and 2nd Silvercrest application
Increasing industrial capacity and bringing new technologies into
production
Industrial capex : € 492 million in 2013
8,400 hires, 3,600 net job creations in 2013
3 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
Executing on key engine development programmes
LEAP has 70% market share for future medium-range
commercial airliners
More than 5,700 orders at end 2013, nearly 6,000 to date
LEAP 1A: testing on track
September – November 2013: FETT test cycle
300 hours, >400 cycles
LEAP 1B: preparation for FETT
Ground testing to start June 2014
LEAP programme on track commercially, on time and on
budget. So far, zero technical surprises
Silvercrest
Complete propulsion system for Dassault 5X
Equips Cessna Citation Longitude
Ground testing and preparing for in-flight testing
on dedicated flying test bed
Target 25-30% market share
2,000+ aircraft (4,000+ Silvercrest engines
The most advanced business jet engine for the highest
potential market segment, already on 2 platforms
4 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
Turbomeca : a dynamic product roadmap
Arrius 2R
Bell Helicopter and Turbomeca team up on new Small Light Short
helicopter
First ever collaboration between Turbomeca and Bell
Arrano launched at Heli-Expo 2013
For 4-6 ton helicopters
Ardiden 3G and Ardiden 3C
International collaborations with Kamov, AVIC Engines
RTM322 : extension to 100% of Turbomeca’s ownership
Heavy helicopters are a high-value, growing market segment
driven by developing countries (oil & gas, mining) and military
Target growth for military applications and accelerated time to
market for heavy commercial engines)
Annual demand up to 2,500 helicopters (2012-31)
5 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
The More Electric Aircraft – an irreversible trend
Boeing 737 Airbus A380 Boeing 787 EGTS* Next gen
aircraft
1967 2007 2009 2016-17 2025
Fuel pump Fuel pump Fuel pump
Landing gear Landing gear
E-Flight controls
Nacelle Nacelle
Pneumatic E-Landing gear
E-Nacelle
Hydraulic Wing anti-icing EGTS
Wing anti-icing Wing anti-icing
Engine start and Engine start and
controls Engine start and
Mechanical controls
Brakes controls
Brakes Brakes
Thrust reverser Thrust reverser
Flight controls Thrust reverser
Flight controls
Cabin equipment Cabin equipment Cabin equipment
Lighting Lighting Lighting
Electric IFE IFE IFE
Avionics Avionics Avionics
Electrical equipment
A key strategic long term market
* The Electric Green Taxiing System allows aircraft to taxi autonomously without use of the main engines
6 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
Investing in our future
2013 total R&D effort of €1.8bn
Self-financed R&D increased as planned to €1.3bn
In €M (8.8% of sales)
Ramp up of LEAP development and testing in line with
2000 the business plan
2 000
€1,800M Development for 2nd Silvercrest application
1800
1600 Total R&D effort
1 500
Split of programs reflects upcoming opportunities
1400 €1,299M c.40%: LEAP (3 applications) and Silvercrest
1200 €1,103M (2 applications)
11000
000
c.30%: A350, helicopter next gen turbines, flight control,
infrared matrix, biometric ID engines…
800 c.30%: R&T in preparation of the future (mostly next gen
600 engines and electrical technologies)
500 Total self-funded R&D €694M
400 €504M
Self-financed R&D to stabilise in 2014 with a lower
200
0 Capitalized R&D level of capitalisation
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Increases in R&T, LEAP (2 engines in test &
certification)
Decrease in Silvercrest
Long term amortization of capitalized R&D remains
sustainable at less than 1% of sales
7 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Positive trends in Civil aftermarket
Civil aftermarket up 19.2%* - above expectations
Recent CFM56 and GE90 engines both contributed strongly
Civil aftermarket momentum to continue in 2014
Growth drivers
More, higher value shop visits on recent CFM56
Strong increase in GE90 aftermarket after no growth in 2012
Catch-up of deferred maintenance as airlines’ financial health improves
Aftermarket recoupling to airline activity
Confirms CFM56 fleet potential for spares revenue to double over 2010-20
Positive global outlook for the airline industry in 2014 according to IATA
Civil aftermarket growth in the low to mid-teens
expected in 2014
*In USD
8 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Defence
Optrolead*: signing of an upstream study program (PEA) for the
development of a 4th generation of airborne electro-optical
gyrostabilized systems
*Equally-owned joint venture between Sagem and Thales
MBDA: selection for the development and production of the firing post
and infrared seeker on the Medium-Range Missile (MMP)
Replacement of France’s Milan antitank missiles
BELL Helicopter: Sagem’s actuators chosen for the future B525
DCNS: 5 submarines have been equipped with 10 optronic masts and
periscopes for the Brazilian, Indian and French navies
Acquisition of the Swiss company Colibrys SA and of the Integrated
Cockpit Solutions activities of Eaton
9 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Scoring commercial successes in Security
MorphoDetection: Medium-range explosives detection
system
New 5-year IDIQ contract for CTX 5800™ EDS from the TSA (US)
for up to $130M
5-year exclusive contract with CATSA (Canada) for up to $100M
Nice Côte d’Azur International Airport in Nice, France purchased four
high-speed CTX 9800 DSi™ explosives detection systems
MorphoTrust: maintained market leadership in the U.S.
Driver license issuance solutions to 42 of 50 states (80% of U.S.
driver licences, 60M IDs issued per year); maintained leadership
since 2011 Safran acquisition
Prime contractor of Universal Enrolment Service (UES)
Morpho: maintained leadership in ID
Chile program start with first million ID documents issued (10 years
contract for provision of passports and ID cards)
Renewal of Albania concession for 10 years with extension to
e-services
10 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran./ 02/
FY 2013 Results
Ross McINNES - Deputy CEO, CFO
11 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Foreword
All figures in this presentation represent Adjusted data
Safran’s consolidated income statement has been adjusted for the impact of:
purchase price allocations with respect to business combinations. Since 2005, this restatement concerns the amortization charged against
intangible assets relating to aeronautical programs that were revalued at the time of the Sagem-Snecma merger. With effect from the first-half
2010 interim financial statements, the Group has decided to restate the impact of purchase price allocations for business combinations. In
particular, this concerns the amortization of intangible assets recognized at the time of the acquisition, and amortized over extended periods,
justified by the length of the Group's business cycles, and also the gain resulting from the remeasurement of the previously held interest in a
business combination achieved in stages;
the mark-to-market of foreign currency derivatives, in order to better reflect the economic substance of the Group's overall foreign currency risk
hedging strategy:
revenue net of purchases denominated in foreign currencies is measured using the effective hedged rate, i.e., including the costs of the hedging
strategy,
the recognition of all mark-to-market changes on foreign currency derivatives relating to future flows is neutralized.
Recurring operating income
It excludes income and expenses which are largely unpredictable because of their unusual, infrequent and/or material nature such as
impairment losses/reversals, capital gains/losses on disposals of operations and other unusual and/or material non operational items.
12 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Fx volatility
Continued Fx volatility during FY 2013
Translation effect: foreign currencies translated into € Average spot rate
Negative impact from $, GBP, BRL and CAD FY 2012 FY 2013
Impact on Revenue and Return on Sales $1.29 $1.33
Transaction effect: mismatch between $ sales and € costs Hedge rate
is hedged FY 2012 FY 2013
Positive impact from $ $1.32 $1.28
Positive impact from other currencies
Impact on Profits
Mark-to-market effect Spot rate
€374M on fair value of financial instruments Dec. 31, June 30, Dec. 31,
Impact on consolidated “statutory” income statement 2012 2013 2013
$1.32 $1.31 $1.38
Diverse impacts on P&L
13 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Consolidated and adjusted income statements
Currency hedging Business combinations
Amortization
FY 2013 reconciliation Consolidated Re- Deferred of intangible PPA impacts - Adjusted
(In €M) data measurement hedging assets - other business data
of revenue loss / gain Sagem/Snecma combinations
merger
Revenue 14,490 205 - - - 14,695
Other operating income / expense (13,195) (2) 13 150 127 (12,907)
Recurring operating income 1,295 203 13 150 127 1,788
Other non current operating income /
185 - - - (216) (31)
expense
Profit (loss) from operations 1,480 203 13 150 (89) 1,757
Cost of net debt (42) - - - - (42)
Foreign exchange financial income (loss) 551 (203) (374) - - (26)
Other finance costs / income (70) - - - - (70)
Net finance costs / income 439 (203) (374) - - (138)
Income tax expense (650) - 110 (52) 52 (540)
Income from associates 15 - - - - 15
Gain on disposal of Ingenico shares 131 - - - - 131
Profit (loss) from continuing operations 1,415 - (251) 98 (37) 1,225
Profit (loss) from discontinuing operations - - - - - -
Minority interests (29) - (1) (2) - (32)
Parent 1,386 - (252) 96 (37) 1,193
14 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2013 profit from operations
FY 2012
(In €M) FY 2013
(restated)
Revenue 13,560 14,695
Recurring operating income 1,444 1,788
% of revenue 10.6% 12.2% Includes:
• Capital gains on sale of
Total one-off items (50) (31) Paris office building
€16M, Globe Motors
€23M;
Capital gain (loss) on disposals 1 39 • Impairment on a legacy
engine programme
Impairment reversal (charge) (1) (17) €(15)M;
• Charge related to past
Other infrequent & material & non operational
(50) (53) service costs on a new
items
DBP plan €(40)M,
Profit from operations 1,394 1,757 acquisition &
% of revenue 10.3% 12.0% integration charges
€(10)M
12.2% recurring operating income
15 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2013 income statement
FY 2012
(In M€) FY 2013
restated
Revenue 13,560 14,695
Recurring operating income 1,444 1,788
% of revenue 10.6% 12.2%
Of which cost of debt of €(42)M
Profit from operations 1,394 1,757
% of revenue 10.3% 12.0% Effective tax rate of 33.4%
Net finance (cost) income (154) (138) Corporate tax surcharge in
France: tax rate of 38%
Income tax expense (254) (540) 2012 tax expense included
the favourable impact of the
Income from associates 19 15
absorption by Safran of
Gain on disposal of Ingenico shares - 131 subsidiaries which had been
involved in loss making
Minority interests (26) (32) activities divested several
Profit – group share 979 1,193 years ago.
Basic EPS (in €) 2.36* 2.87**
* Based on 415,280,826 shares
** Based on 416,292,736 shares
Net profit growth of 21.9%
16 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2013 revenue
Record OEM production rates
in aerospace coupled with
(In €M)
continued positive trends in
civil aerospace aftermarket
+8.4%
Strength in avionics and
1,118 14,678 166 14,512 183 14,695 double-digit growth at
MorphoTrust
13,560
Unfavourable currency impact
Negative translation effect
(incl. $, GBP, BRL, CAD),
particularly affecting Security
+8.2% activities
organic
Changes in the scope of
consolidation include:
Acquisitions: GEPS, RTM322
programme, AB notes, Cassis
FY 2012 Organic FY 2013 Currency FY 2013 Acquisitions & FY 2013
Divestment: Globe Motors Inc
variation at constant impact at constant activities
FY 2012 FY 2012 newly
structure and structure consolidated,
exchange rates disposals
17 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2013 recurring operating income
Main organic profitability
drivers
Propulsion: increased OE
(In €M)
volumes and favourable
+23.8%
pricing in civil engines,
strongly positive trend in civil
aftermarket
103 1,781 7 1,788
234 1,678 Positive impact of higher OE
1,444 production rates on nacelles,
thrust reversers, wiring,
landing and braking systems
Avionics
Currency hedging
10.6% 12.2%
Production and overhead
RoS +16.2% RoS costs savings (notably in
organic Equipment and Defence)
FY 2012 Organic FY 2013 Currency FY 2013 Acquisitions & FY 2013
Changes in the scope of
restated variation at constant impact at constant activities consolidation include:
(IAS 19A) FY 2012 FY 2012 newly
structure and structure consolidated, Acquisitions: GEPS, RTM322
exchange rates disposals programme, AB notes,
Cassis
Divestment: Globe Motors Inc
18 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Research & Development
(In €M) FY 2012 FY 2013 Variation
Total R&D (1,594) (1,821) (227)
External funding 491 522 31
Total self-funded cash R&D (1,103) (1,299) (196) Self-funded cash R&D effort at
peak level of 8.8% of sales
as a % of revenue 8.1% 8.8% 0.7 pt
Tax credit 124 140 16 Ramp up of LEAP development
and testing in line with the
Total self-funded cash R&D after tax credit (979) (1,159) (180) business plan,
2nd Silvercrest application
Gross capitalized R&D 504 694 190
Increase of capitalized costs:
Amortised R&D (68) (76) (8)
€190M
P&L R&D in recurring EBIT (543) (541) 2
as a % of revenue 4.0% 3.7% (0.3) pt
19 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2013 results by activity
Holding
(In €M) FY 2013 Propulsion Equipment Defence Security
& others
Revenue 14,695 7,791 4,121 1,278 1,502 3
Year-over-year growth in % 8.4% 11.2% 11.6% (2.8)% (2.8)% na
Recurring operating income 1,788 1,359 380 87 120 (158)
as a % of revenue 12.2% 17.4% 9.2% 6.8% 8.0% na
20 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Aerospace Propulsion
FY 2012 Organic
(In €M) FY 2013 Change
(restated) Change
Revenue 7,005 7,791 +11.2% +11.3%
Recurring operating income 1,076 1,359 +26.3%
% of revenue 15.4% 17.4% +2.0 pts
One-off items 1 (14)
Profit (loss) from operations 1,077 1,345
% of revenue 15.4% 17.3%
Growing revenue
Robust rise in civil OEM deliveries (CFM, high thrust engines)
Strong growth in civil aftermarket
EBIT: Excellent profitability
Positive impact of better OE volume and unit revenue for civil engines
Favourable trend in civil aftermarket (recent CFM56 and GE90)
Increased contribution of helicopter turbine support contracts
Productivity improvements
Positive currency effects
21 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Aircraft Equipment
FY 2012 Organic
(In €M) FY 2013 Change
(restated) Change
Revenue 3,691 4,121 +11.6% +9.8%
Recurring operating income 286 380 +32.9%
% of revenue 7.7% 9.2% +1.5 pt
One-off items (16) (2)
Profit (loss) from operations 270 378
% of revenue 7.3% 9.2%
OE driven revenue growth
Increases in OEM production rates (B787, B737; A400M, A330 and A320 programmes; regional jets)
favourably impact landing gears, harnessing, nacelle and thrust reversers activities
Increasing activity related to the A350 programme
Continued momentum for the carbon brakes activity
Significant improvement in profitability
Favourable volume impact and productivity gains
Supportive mix/volume effect of services on auxiliary power gearboxes, nacelles and wheels and brakes.
High returns of carbon brakes as a result of a larger installed base and continued air traffic growth
Positive currency effect
22 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Defence
FY 2012 Organic
(In €M) FY 2013 Change
(restated) Change
Revenue 1,315 1,278 (2.8)% (2.2)%
Recurring operating income 79 87 +10.1%
% of revenue 6.0% 6.8% +0.8 pt
One-off items - 7
Profit (loss) from operations 79 94
% of revenue 6.0% 7.4%
Growth in Avionics with improved level of profitability
Higher deliveries of seeker kit modules. Solid activity in flight control systems
Favourable mix/volume effect on profitability
Softer revenue in Optronics, slightly impacting profits
Delivery of the Felin infantry combat system to 4 regiments of the French Army (same as in 2012)
First maintenance and upgrade activity on Felin equipment
Long-range infrared goggles down compared to 2012
Cost-savings measures mitigated margin pressure
23 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Security
FY 2012 Organic
(In €M) FY 2013 Change
(restated) Change
Revenue 1,546 1,502 (2.8)% (0.5)%
Recurring operating income 145 120 (17.2)%
% of revenue 9.4% 8.0% (1.4) pt
One-off items (25) (3)
Profit (loss) from operations 120 117
% of revenue 7.8% 7.8%
MorphoTrust continues robust growth driven by US Federal activities (Universal Enrollment, FBI,
weapons permits); margins under pressure from budgetary restrictions
Persistent softness in Morpho’s traditional biometric activities due to run-off of export contracts;
competitive pressure impacts profitability of new contracts
e-Documents: regaining traction in Q4 as NFC and LTE technology deliveries commenced; volume
declines impacted margins, exacerbated by R&D effort, somewhat compensated by cost reductions
Slow growth in detection: strong momentum at year-end with US, Canada and other export deliveries of
CTX systems; higher volumes and better mix boosting profits
New management taking measures to take full advantage of the outstanding potential
24 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Fx hedging: improved rate for 2014
Approx. 50% of Safran US$ revenue naturally hedged by US$ procurement
Hedge portfolio, Feb. 4, 2014
Total: $19bn Higher expected level of net USD
exposure for 2014-17 due to
Estimated exposure needs strong growth of businesses with
In US$ bn exposed USD revenue
6.0 ~6.0 ~6.0 2014 and 2015 are fully hedged
5.6 5.8
6
Further increase in 2016 hedging
5.0
5 $4.3bn achieved at $1.25 to
4.3 4.9
rise to $4.9bn at $1.25 as
4
long as €/$Fx hedging: benefiting margins over 2014-17
Estimated impact on recurring operating income
of targeted €/$ hedge rates
€/$ 1,4 1.37 200 EBIT impact
hedge vs. previous
rate 1,35 180 year (in €M)
1.32
160
1,3 1.28
155 1.26 1.26 140
1.25 1.25
1,25 135 130 120
1,2 100
80
1,15
70 60
1,1
40
1,05 38
20
1 0
2011 2012 2013 2014E 2015E 2016E 2017E
26 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Free Cash Flow
FY 2012*
(in €M) FY 2013
Restated
Of which amortization of
Adjusted net profit 979 1,193 tangibles and intangibles
for €512M and provisions
Depreciation, amortization and provisions 700 678 (net) for €67M
Others 23 113
Good control over WC
Cash from operating activities before change in requirements in a context
1,702 1,984
WC of strong increases in
production in aerospace
Change in WC (85) 155
markets
Capex (tangible assets) (419) (492)
Increased R&D spending
Capex (intangible assets)** (634) (935) and Capex investments;
includes €42M proceeds
from sale of an office
Free cash flow 564 712
building in Paris
* 2012 is presented in a comparable format to 2013
** Of which €694M capitalised R&D in 2013 vs €504M capitalised in 2012
27 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Net debt position
(in M€) Cash flow from operations
equals 1.11x recurring EBIT
Decreased WC requirements
R&D
Change and 2012 final dividend
Cash flow in WC Capex
Net debt at from ops Net debt at (€0.65/share) and
Dec 31, 2012 155 Dec. 31, 2013 2013 interim dividend
(€0.48/share)
(1,427)
“Disposals” include
12.57% of Ingenico: €287M
1,984 Dividends* Acquisitions
& others Globe Motors: €68M
(481) 353
(932) (741) (1,089)
“Acquisitions & Others” include:
Disposals
GEPS: €(301)M
Extension to full ownership in the
RTM322 programme: €(293)M
€712M Free Cash Flow Safran-Albany JV for LEAP
composites €(33)M
* Includes €(10)M of dividends to minority interests
28 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Gross debt and liquidity
Gross debt repayment schedule
(Dec. 31, 2013)
Cash & equiv.
€1,672M
+
Debt hedging
instruments
€(31)M
Gross
debt
€2,730M
Net debt €1,089M
USPP - $1.2bn, maturities 2019, 2022 & Committed & undrawn financing
2024; subject to 1 covenant resources: €2.55bn; subject to 1
(net debt/EBITDABalance sheet highlights
Dec 31, 2012 Shareholders’ equity up
(In M€) Dec 31, 2013
(restated)
by €0.8bn
Goodwill 3,078 3,495
Tangible & Intangible assets 6,476 7,381
OWC decreased by €127M
Other non current assets 818 734
at €763M (5.2% of revenue)
Operating Working Capital 890 763
Net (debt) cash (932) (1,089)
Provisions grew slightly
Shareholders’ equity - Group share 5,834 6,636
Minority interests 163 178
Non current liabilities (excl. net (debt) cash) 1,732 2,082
Provisions 2,887 2,975
Other current liabilities / (assets) net (286) (587)
30 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Customer financial guarantees
Dec. 31, Dec. 31,
(In $M)
2012 2013
Total guarantees 72 72
Estimated value of pledges 20 11
Net exposure on these guarantees 37 47
Provisions 37 36
Stabilization of the total guarantees at the
lowest level in the past 25 years
31 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran./ 03/
Outlook
32 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Equity shareholding
As of Dec. 31, 2012 As of Dec. 31, 2013
Public French State Public French State
54.1% 30.2% 62.8% 22.4%
Employees
14.7%
Treasury Employees
shares
15.4%
0.3%
Treasury shares
0.1%
Free float continued to increase
33 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.2013 dividend
Dividend
per share
(€)
Final
Dividend A proposal for a dividend payment
distribution 1.12
(€M) to parent holders of €1.12 at next
0.96 AGM on May 27, 2014
Interim
dividend
distribution
€0.48 interim dividend already
(€M) 0.62 267 paid in 2013 (€200M)
271
0.50 €0.64 to be paid in 2014
0.38 (€267M)
154
0.25
202
72 152 102 129 200 Ex-dividend date: May 29, 2014
32
Payment date: June 3, 2014
2008 2009 2010 2011 2012 2013
Total
dividend 104 152 202 256 400 467
distribution
(€M)
€1.12/share dividend payment subject to shareholders’ approval
34 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Estimated impacts of IFRS11 on 2013 accounts
IFRS 11 Joint Arrangements is applied starting January 1, 2014
• 2014 performance will be measured against restated figures for 2013
• Reclassification of some jointly held activities previously proportionally
integrated, henceforth equity associates
Estimated impacts are the following:
Summary estimated impacts 2013 restatements
Orders
Order book Approx (800) M€
Income statement
Revenue Slightly more than (300) M€
Adjusted recurring operating Slightly less than (10) M€
income
Net income No impact
Balance sheet
Net debt Approx 130 M€ higher
Working capital Approx 20 M€ lower
35 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.2014 key assumptions
Estimated IFRS 11 impacts of around €(300)M to 2013 revenue and less than
€(10)M to 2013 adjusted recurring operating income
Healthy increase in aerospace OE deliveries
Boeing 737, A330, regional jets...
Civil aftermarket growth in the low to mid-teens percentage
Mainly driven by recent CFM56 engines
Stable self-funded R&D level with less capitalisation
R&T; helicopter turbines higher; LEAP peaking; Silvercrest lower as peak is
passed
Stable tangible capex
Profitable growth for the security business
On-going Safran+ plan to enhance the cost structure and reduce overhead
Increased focus on Competitiveness, Expertise and Innovation
36 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2014 outlook
Adjusted revenue expected to increase by a percentage in mid single
digits* at an estimated average rate of USD 1.30 to the Euro
Adjusted recurring operating income expected to increase by a
percentage in low double digits* at a hedge rate of USD 1.26 to the
Euro
Free cash flow expected to represent close to 40% of the adjusted
recurring operating income subject to usual uncertainties on the
timing of advance payments
Strong confidence for the long term
CFM franchise is assured for the next decades (aftermarket revenue
and successful LEAP transition)
Acquisitions reinforce Safran for the long term in helicopters and MEA
€/$ hedged book provides positive impact on profits
*2014 performance will be measured relative to the 2013 accounts restated for the effects of IFRS 11
37 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran./ 04/
Questions & Answers
38 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran./ 05/
Additional information
39 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Amended IAS19
FY 2012 income statement
Impact of
FY 2012 FY 2012
(In €M) amended
published restated
IAS19
Revenue 13,560 - 13,560 The €(27)M decrease in recurring
operating income results from
the discontinuation of the
Recurring operating income 1,471 (27) 1,444
% of revenue
amortisation of actuarial gains
10.8% 10.6%
and losses and past service
Profit from operations 1,421 (27) 1,394
costs previously not recognised
% of revenue 10.5% 10.3%
(Euro 10 million impact) and the
direct recognition in 2012 of past
Net finance (cost) income (152) (2) (154) service costs relating to
Income tax expense (263) 9 (254) agreements entered into in the
Profit (loss) from discontinued op. - - - second half of 2012 (Euro (36)
Minority interests (26) - (26)
million impact)
Share in profit from associates 19 - 19
Profit - group share 999 (20) 979
Basic EPS (in €) 2.41 (0.05) 2.36
40 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2012: R&D by activity
(In €M) FY 2012 Propulsion Equipment Defence Security
Total self-funded cash R&D (1,103) (649) (213) (117) (124)
as a % of revenue 8.1% 9.3% 5.8% 8.9% 8.0%
Tax credit 124 47 29 36 12
Total self-funded cash R&D after tax credit (979) (602) (184) (81) (112)
Gross capitalized R&D 504 342 126 22 14
Amortised R&D (68) (25) (32) (8) (3)
P&L R&D in recurring EBIT (543) (285) (90) (67) (101)
as a % of revenue 4.0% 4.1% 2.4% 5.1% 6.5%
41 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.FY 2013: R&D by activity
(In €M) FY 2013 Propulsion Equipment Defence Security
Total self-funded cash R&D (1,299) (790) (254) (126) (129)
as a % of revenue 8.8% 10.1% 6.2% 9.9% 8.6%
Tax credit 140 51 38 39 12
Total self-funded cash R&D after tax credit (1,159) (739) (216) (87) (117)
Gross capitalized R&D 694 517 129 31 17
Amortised R&D (76) (24) (36) (10) (6)
P&L R&D in recurring EBIT (541) (246) (123) (66) (106)
as a % of revenue 3.7% 3.2% 3.0% 5.2% 7.1%
42 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Aerospace OE* / Services revenue split
FY 2012 FY 2013 % change
Revenue
Adjusted data
(in Euro million) OE Services OE Services OE Services
Propulsion 3,718 3,287 4,045 3,746 8.8% 14.0%
% of revenue 53.1% 46.9% 51.9% 48.1%
Equipment 2,637 1,054 2,907 1,214 10.2% 15.2%
% of revenue 71.4% 28.6% 70.5% 29.5%
* All revenue except services
43 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Quantities of major aerospace programmes
FY 2012 FY 2013 %
Number of units delivered
CFM56 engines 1,406 1,502 7%
High thrust engines 567 619 9%
Helicopter engines 924 934 1%
M88 engines 26 20 (23)%
TP400 - 36 na
A380 nacelles 108 108 -
A330 thrust reversers 146 166 14%
A320 thrust reversers 489 513 5%
Small nacelles (biz & regional jets) 534 605 13%
44 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.Affirming our strategy over the electrical energy chain
Consolidation of all electrical power activities within Labinal Power Systems Long-term outlook
A world leader in electrical Strong installed base &
power systems with combined recurring aftermarket
revenues
Competitive
revenues c. € 1.4 billion in
positioning in
+ 2014
aerospace electrical
Power
generation systems
+
Acquisition Capture benefits of
closed in Primary &
Electrical Power systems
Electrical secondary closer integration of
March 2013 equipment distribution electrical systems
+ and wiring, with
aircraft engines and
gearboxes
+
Lead innovation in
+ Systems the electrification of
Wiring integration aircraft equipment
+ Support & Broader offering:
Services
higher shipset value
Acquisition
PDMS
expected to
Complete offering in power 12,000 people in 12 countries
close in H1
2014 systems
45 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.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.
46 / FY 2013 EARNINGS / FEBRUARY 20, 2014 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.47 / FY 2013 EARNINGS / FEBRUARY 20, 2014 / Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
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