Tier 1 supplier in Aerospace, Defence & Security - Safran
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Tier 1 supplier in
Aerospace, Defence & Security
Investor roadshows
/ November 2014 /
0 / Q3
INVESTOR
REVENUE
ROADSHOWS
2011 / OCTOBER
/ November
21, 2011
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.
Tier 1 supplier in Aerospace - Defence - Security
2013 revenue* by activities
Aircraft
Equipment
FY 2013* (adjusted)
28%
Revenue €14,363M
Aerospace
9% Defence Recurring op. income €1,780M (12.4% of revenue)
Propulsion 53% €14.4Bn Net income - Group share €1,193M (€2.87/share)
10%
Security Free Cash Flow €699M
Net debt position (Dec. 31) €1,220M
*Restated for the application of IFRS 11
1 / INVESTOR ROADSHOWS / November 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.
Leading market positions
Aerospace Defence Security
#1 ww #1 Europe #1 ww
Single aisle engines* Optronics Biometric and ID solutions
Helicopter turbines
Landing gear #3 ww A leader in aviation markets
Wiring Inertial navigation systems Detection
Power transmission
#2 ww
Space Propulsion
Engine nacelles
Wheels & brakes
#4 ww
Military engines
~80% of revenue coming from civil activities
*Through CFM International (50-50 JV with General Electric)
2 / INVESTOR ROADSHOWS / November 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.
/ Key themes /
Summary of Q3 and 9m 2014 revenue
Positive trends in civil aftermarket
Investing in our future
2014 outlook
3 / INVESTOR ROADSHOWS / November 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.
LEAP first flight
Launching the next phase of testing
LEAP first flight on a modified 747 flying testbed on October 6
Very successful first flight: engine behaved well
The configuration currently being tested is a fully integrated
propulsion system (IPS*)
LEAP-1A/-1C well on track for engine certification in 2015
Preparing for production readiness
CFM has a world-class supply chain
LEAP ramp-up supported by CFM56 success
Investments in new and enhanced manufacturing facilities and
technology
LEAP engine takes to the skies on
Close to 2,000 firm orders and commitments received YTD October 6, 2014
Bringing total backlog to more than 7,700 engines
70%+ market share for future medium-range commercial airliners
LEAP certification program progressing according to plan
* The IPS is unique to the LEAP-1C. CFM provides the engine as well as the nacelle and thrust reverser developed by Nexcelle (JV between Safran and GE). These
elements, including the pylon provided by COMAC, were designed in conjunction with each other to offer improved aerodynamics, lower weight and easier maintenance
4 / INVESTOR ROADSHOWS / November 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.
Q3 2014 and 9m 2014 financial highlights
+5.2%
10,797
10,268
+6.8%
3,361 3,589
(€M) (€M)
Q3 2013 Q3 2014 9m 2013 9m 2014
Strong revenue growth in Q3 driven by continuing momentum in Propulsion. With a 5.2% increase in the
9m 2014 period, Safran is well on track to achieve its full year revenue guidance of mid single digit
growth.
Propulsion continued to benefit from services growth (+15.9%), notably in civil aftermarket. Aircraft
Equipment growth is driven by increasing OE sales. Revenue declined slightly in Defence. Security
recorded another quarter of organic growth (+6.3%) fuelled by Identification activities.
Civil aftermarket was up 11.9% in USD terms in Q3 driven by higher spares revenue from CFM56 and
GE90 engines despite a high comparison base in Q3 2013. YTD growth was 10.3%, driven by first
overhaul activity on recent CFM56 and GE90 engines, compared to a high level of business in 9m 2013
continuing in Q4 2013.
5 / INVESTOR ROADSHOWS / November 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.
Q3 2014 revenue by activity
Main growth drivers
Continuing momentum in Propulsion, particularly
in services (+15.9% in €):
Q3 2013 Services: 11.9% growth in civil aftermarket (in $)
Adjusted data Change Change driven by higher spare parts sales of CFM56 and
Q3 2014 GE90 engines. Good contribution of military
(in Euro million)
Restated reported organic
services and helicopter support activities.
Original equipment: slightly higher volumes and
Aerospace propulsion 1,771 1,944 9.8% 8.9% favourable mix in CFM56 and high thrust
engines. Increase in military engines deliveries
(M88, TP400)
Aircraft equipment 982 1,021 4.0% 4.7%
Equipment: OE driven growth, notably thanks to
the ramp up of the 787 (LG and wiring) and higher
Defence 258 256 (0.8)% (4.3)% A380 nacelles volumes
Security 349 368 5.4% 6.3% Security: strong growth in Identification
(Morphotrust in the US, Government Solutions in
Chile and in Europe)
Others 1 - na na
Offsetting impacts
Total revenue 3,361 3,589 6.8% 6.3% Lower helicopter turbine volumes
Lower revenue in Enterprise Solutions
(smartcards)
Softness in Optronics
6 / INVESTOR ROADSHOWS / November 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.
9M 2014 revenue by activity
9m 2013 Change Change
Adjusted data 9m 2014
(in Euro million)
restated reported organic
Aerospace propulsion 5,442 5,707 4.9% 4.4%
Aircraft equipment 2,927 3,158 7.9% 9.3%
Defence 824 840 1.9% 1.0%
Security 1,073 1,090 1.6% 5.4%
Others 2 2 na na
Total revenue 10,268 10,797 5.2% 5.6%
7 / INVESTOR ROADSHOWS / November 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
Q3 2013 Q3 2014 % change
Revenue
Adjusted data
(in Euro million) OE Services OE Services OE Services
Propulsion 888 883 921 1,023 3.7% 15.9%
% of revenue 50.1% 49.9% 47.4% 52.6%
Equipment 698 284 731 290 4.7% 2.1%
% of revenue 71.1% 28.9% 71.6% 28.4%
9m 2013 9m 2014 % change
Revenue
Adjusted data
(in Euro million) OE Services OE Services OE Services
Propulsion 2,817 2,625 2,820 2,887 0.1% 10.0%
% of revenue 51.8% 48.2% 49.4% 50.6%
Equipment 2,088 839 2,278 880 9.1% 4.9%
% of revenue 71.3% 28.7% 72.1% 27.9%
(*) All revenue except services
8 / INVESTOR ROADSHOWS / November 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 programs
Q3 2013 Q3 2014 % 9m 2013 9m 2014 %
Number of units delivered
CFM56 engines 373 382 2% 1,145 1,174 3%
High thrust engines 146 155 6% 450 503 12%
Helicopter engines 225 170 (24)% 713 531 (26)%
M88 engines 2 6 x3 16 18 13%
TP400 7 14 x2 18 26 44%
787 landing gear sets 13 29 x2.2 44 88 x2
A380 nacelles 20 27 35% 72 84 17%
A330 thrust reversers 58 38 (34)% 124 122 (2)%
A320 thrust reversers 138 111 (20)% 399 369 (8)%
Small nacelles (biz & regional jets) 143 179 25% 400 487 22%
9 / INVESTOR ROADSHOWS / November 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./ Key themes /
Summary of Q3 and 9m 2014 revenue
Positive trends in civil aftermarket
Investing in our future
2014 Outlook
10 / INVESTOR ROADSHOWS / November 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.9m 2014: positive trends in Civil aftermarket
Civil aftermarket up 10.3%* YTD
Q1 +12.4%; Q2 +6.5%; Q3 +11.9%
Q3 2014 was driven by higher spares revenue from CFM56 and GE90 engines
despite a high comparison base in Q3 2013
Growth drivers
More, higher value shop visits on recent CFM56
Strong increase in GE90 aftermarket
Catch-up of deferred maintenance as airlines’ financial health improves
Aftermarket recoupling to airline activity
Confirms CFM56 fleet potential for spares revenue to double from 2010 dip
before 2020e
Positive global outlook for the airline industry in 2014 according to IATA
*In USD
Continuing momentum in civil aftermarket
11 / INVESTOR ROADSHOWS / November 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.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, Air traffic forecast
impacting new spare parts sales
Segment behaviour also varies Economics
according to economic context and
Airlines maintenance behaviour
air traffic
New model based on airlines
Customer
segmentation
Differentiate segments according to Maintenance contracts
maintenance behaviour
Simulate airlines’ reaction to
changing macro-economic Theoretical aging
environment
Engine constraints
12 / INVESTOR ROADSHOWS / November 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.CFM56: strong prospects until 2025 and beyond
CFM56 spare parts revenue to peak by around 2025E
CFM56 active installed fleet to peak by 2018E
at ~26,500 engines (~31,000 deliveries)
13 / INVESTOR ROADSHOWS / November 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.Forecasting spare parts
Outcome of the new model (CFM56 spare parts forecast)
Expected CFM56 spare parts
revenue profile
CFM56 spare parts revenue to increase
consistently and to peak by around 2025E
3x
2010 dip 2x Revenue should double from 2010 dip before
x 2020E
1st generation CFM56 spare parts potential to fade
out within 5 years from now
2007 2010 2013 2016 2019 2022 2025 2028
The new model confirms 2025 horizon
“Behaviour” model adds increased visibility on the short term
14 / INVESTOR ROADSHOWS / November 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.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 Service programmes aiming to
support airlines on a predictable
guarantees cost per engine flight hour
decoupling of revenue & cash-in with costs & cash-out basis, to enable accurate
forecasting of operating costs,
ESPO (Engine Service Per Overhaul): fraction of revenue booked reduced cost of ownership, and
progressively and remainder booked at the time of SV improved asset utilisation
ESPH (Engine Service Per Hour): revenue booked progressively
15 / INVESTOR ROADSHOWS / November 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.Slow transition in business model
Active installed fleet of engines
in 2020E (estimate)
30 000
T&M
~25,000 Strong adoption of LEAP customers of
25 000 RPFH
RPFH but LEAP fleet will represent ~10% of
combined CFM fleet (by 2020E)
20 000
CFM56 is mostly based on
15 000
Time & Material
10 000
Therefore, no material change expected
5 000 ~2,700 ~3,000 from RPFH accounting
by 2020E
0
CFM56 GE90 LEAP
2014 to 2025: P&L will remain dominated by current model
Impact of RPFH will be gradual
16 / INVESTOR ROADSHOWS / November 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./ Key themes /
Summary of Q3 and 9m 2014 revenue
Positive trends in civil aftermarket
Investing in our future
2014 Outlook
17 / INVESTOR ROADSHOWS / November 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.CFM56 lives longer, LEAP sells better
# deliveries
Increasing assembly rates for
narrowbodies
1,800+
Faster LEAP ramp up
Outstanding commercial success:
1,550
more than 7,700 engines in backlog vs
5,700 at 31 Dec. 2013
1,800 LEAP in 2020, 100 engines per
year more than 2013 CMD forecast
Higher CFM56 volumes over 2015-20
Strong backlog of 4,800 engines reflects
sustaining demand and healthy order
intake rate YTD
Increasing market share on A320ceo
More than 400 additional CFM56
engines to be delivered in 2015-20
(e) (e) (e) (e) (e) (e) (e) compared to 2013 CMD forecast
Capturing positive momentum of narrowbody segment
18 / INVESTOR ROADSHOWS / November 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.Increased 2014 R&D and capex targets
CFM56 LEAP GE9X
Programme
Development
Higher New
Acceleration
Volumes + Higher Opportunities
Production Rates
Increased R&D, capex to meet accelerated targets and opportunities
fully justified by the programmes’ outstanding commercial success.
Cash consuming investments peaking in 2014.
19 / INVESTOR ROADSHOWS / November 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.Cash allocation in line with Group strategy
Research & Development
Create a distinctive difference through technological innovation (long term)
Spending reflects winning some attractive new business (medium term)
Business
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 2007
20 / INVESTOR ROADSHOWS / November 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.Increasing cash returns to shareholders
Dividend
per share
(€)
Final Dividend
distribution
(€M) 1.12
0.96
Interim
dividend
2013 dividend: €1.12 per share
distribution
(€M)
€0.48 interim dividend already
0.62 267
271 paid in 2013 (€200M)
0.50
0.38 €0.64 paid in june 2014
154 (€267M)
0.25
202
72 152 102 129 200
32
2008 2009 2010 2011 2012 2013
Total
dividend 104 152 202 256 400 467
distribution
(€M)
More than €1.5 billion returned to shareholders from 2008 to 2013
21 / INVESTOR ROADSHOWS / November 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./ Key themes /
Summary of Q3 and 9m 2014 revenue
Positive trends in civil aftermarket
Investing in our future
2014 Outlook
22 / INVESTOR ROADSHOWS / November 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
Healthy increase in aerospace OE deliveries
Propulsion : CFM56, high thrust; Equipment : Boeing 787, A330, A350, regional jets...
Civil aftermarket growth in the low to mid-teens percentage
Driven by recent CFM56 and GE90 engines
Increase of self-funded R&D of the order of € 50 M to € 100 M compared to 2013, with a
lower level of capitalisation
Intensification and acceleration of LEAP testing and certification, GE9X commencing,
Silvercrest stabilising, helicopter turbines higher
Increase of tangible capex of the order of € 70 M to € 100 M compared with 2013
Intensification and acceleration of LEAP testing and certification, capacity increases
Profitable growth for the security business
Characterised by significant exposure to translation effect
On-going Safran+ plan to enhance the cost structure and reduce overhead
23 / INVESTOR ROADSHOWS / November 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
The full-year 2014 adjusted revenue and adjusted EBIT outlook is confirmed:
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
approaching the mid teens at a hedge rate of USD 1.26 to the Euro.
The hedging policy isolates adjusted recurring operating income from current EUR/USD
variations except for the part generated in USD by activities located in the US, subject to the
translation effect when converted into Euro.
Regarding free cash flow, cash flow linked to business performance will be
consistent with objectives, while significant uncertainty remains concerning
the rhythm of payments (including advance payments) by State-customers in
the fourth quarter.
24 / INVESTOR ROADSHOWS / November 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./ Annexe /
Additional information
25 / INVESTOR ROADSHOWS / November 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: $19.7bn Hedge portfolio* (Oct, 16 2014)
Yearly Exposure: $6.5bn to $7.0bn - Higher expected level of net USD exposure
for 2015-18 due to strong growth of businesses with exposed USD revenue
2016
2014 & 2015 fully hedged $5.5bn achieved at $1.25 (including knock out option
7 ($bn) strategies) to rise to $6.7bn at $1.25 through
accumulators as long as €/$Fx hedging: benefiting margins over 2014-17
Estimated impact on recurring operating income
of targeted €/$ hedge rates
€/$ EBIT impact
hedge vs. previous
rate year (in €M)
27 / INVESTOR ROADSHOWS / November 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.H1 2014 financial highlights
Growing adjusted revenue thanks to most Strong increase in profitability: adjusted Decrease in Free Cash Flow due to
Aerospace activities recurring operating income increased R&D and CAPEX
at 13.6% of revenue
+4.4%
7,208
+16.5% 981
6,907
842
167
(75)%
41
(€M) (€M) (€M)
H1 13 H1 14 H1 13 H1 14 H1 13 H1 14
restated* restated* restated*
Adjusted net profit (group share) at €1.52
per share (vs €1.58 in H1 2013 including Moderate net debt (25% gearing)
€0.31 from the sale of Ingenico shares)
(4)% June 30, Dec. 31, June 30,
658 632 2013* 2013* 2014
(€M)
(€M)
H1 13 H1 14
(1,317) (1,220) (1,797)
restated* (*) 2013 has been restated to reflect the changes induced by IFRS11
28 / INVESTOR ROADSHOWS / November 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
H1 2013 Organic
(In €M) H1 2014 Change
restated Change
Revenue 3,671 3,763 +2.5% +2.3%
Recurring operating income 631 745 +18.1%
% of revenue 17.2% 19.8% +2.6pt
One-off items (15) (1)
Profit (loss) from op. 616 744
% of revenue 16.8% 19.8%
Growing revenue
Increased volume and better mix in civil OE
Favourable trends in civil aftermarket
Positive contribution from helicopter turbine support contracts thanks to additional contribution of RTM322
programme and gradual recovery in EC225 support activities
Excellent profitability mainly driven by civil aftermarket
Aftermarket (recent CFM56 and GE90 engines, helicopter turbine support contracts)
Impact of improved mix of civil engines OE
Positive currency effect
29 / INVESTOR ROADSHOWS / November 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
H1 2013 Organic
(In €M) H1 2014 Change
restated Change
Revenue 1,945 2,137 +9.9% +11.6%
Recurring operating income 174 202 +16.1%
% of revenue 8.9% 9.5% +0.6 pt
One-off items (3) -
Profit (loss) from op. 171 202
% of revenue 8.8% 9.5%
OE driven revenue growth
Increase in OE deliveries on Boeing 787 (landing gear and wiring systems) as well as in large nacelles (A380,
A330) and small nacelles.
Higher service revenue notably in carbon brakes and in nacelles
Significant improvement in profitability
Favourable volume impact on wiring systems and on nacelles
Carbon brakes: high returns as a result of a larger installed base and continued air traffic growth
Positive currency effect
30 / INVESTOR ROADSHOWS / November 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
H1 2013 Organic
(In €M) H1 2014 Change
restated Change
Revenue 566 584 +3.2% +3.4%
Recurring operating income 45 44 (2.2)%
% of revenue 8.0% 7.5% (0.5) pt
One-off items 2 2
Profit (loss) from op. 47 46
% of revenue 8.3% 7.9%
Mid-single digit growth in Avionics and stability in Optronics revenue
Avionics: solid growth notably in navigation equipment
Optronics: delivery of the FELIN infantry combat system to two regiments of the French Army, at the same
rhythm as last year
Satisfactory level of profitability despite increased R&D expenses to maintain leading positions
Avionics: favourable volumes in navigation as well as productivity improvements
Optronics: maintenance and upgrade activity on FELIN equipment
31 / INVESTOR ROADSHOWS / November 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
H1 2013 Organic
(In €M) H1 2014 Change
restated Change
Revenue 724 722 (0.3)% +5.0%
Recurring operating income 65 65 -
% of revenue 9.0% 9.0% -
One-off items - (4)
Profit (loss) from op. 65 61
% of revenue 9.0% 8.4%
Resumption of organic growth in Identification
MorphoTrust delivered a good performance, driven by the on-going nationwide implementation of the federal
Unified Enrolment System (UES) and TSA Pre✓™ programme
Continuing momentum in Chile: close to 3 million passports and ID cards issued
Detection: revenue up on higher volumes and increased contribution from services; good level of
profitability
Business solutions: mixed performance for both telecom and banking markets as higher volumes were
largely offset by pricing pressures
Negative translation effect from foreign currencies offset by cost reductions yielding profitability
improvements
32 / INVESTOR ROADSHOWS / November 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
H1 2013
(in €M) H1 2014
restated
Adjusted net profit 658 632 Slight increase in
Depreciation &
Depreciation, amortization and provisions 286 376 Amortisation at €(298)M
Provisions slightly higher
Others 68 132
Cash from operating activities 1,012 1,140 Increase in working capital
requirements to cope with
Change in WC (218) (319) rising production rates in
aerospace markets
Capex (tangible assets) (227) (299)
Higher R&D and Capex
Capex (intangible assets) (400) (481)
investments
Free cash flow 167 41
33 / INVESTOR ROADSHOWS / November 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
H1 2013
(In €M) H1 2014 Change
Restated
Total R&D (848) (982) (134)
External funding 261 273 12
Total self-funded cash R&D (587) (709) (122) Self-funded cash R&D effort above
as a % of revenue 8.5% 9.8% 1.3 pt 9% of sales
Tax credit 63 73 10 Ramp-up of LEAP continues, A350
and helicopters higher, Silvercrest
Total self-funded cash R&D after tax credit (524) (636) (112) stabilising
Gross capitalized R&D 290 355 65 Increase of capitalized costs: +€65M
Amortised R&D (37) (39) (2)
Silvercrest fully expensed
P&L R&D in recurring EBIT (271) (320) (49) since 1 April 2014
as a % of revenue 3.9 % 4.4 % 0.5 pt
34 / INVESTOR ROADSHOWS / November 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 1.2x EBIT
Net debt at Net debt at
Dec 31, 2013* June 30, 2014 Increase in WC requirements
Cash flow Change to cope with rising production
from ops in WC rates in aerospace markets
R&D
(319) and 2013 final dividend of €266M
Capex (€0.64 per share) to parent
holders
(1,220) 1,140 (1,797)
“Acquisitions & Others”
(780) include:
Dividends**
Eaton: €(197)M
Acquisitions
(276) & others
Safran Aerospace
Composites Inc., Safran
(342) Aero Composites SAS…
€41M Free Cash Flow
*Restated for the application of IFRS11
** Includes €(10)M of dividends to minority interests
35 / INVESTOR ROADSHOWS / November 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.Balance sheet highlights
Dec 31, Shareholders’ equity up
June 30,
(In €M) 2013 by €419M
2014
restated
Goodwill 3,399 3,322
Tangible & Intangible assets 7,083 7,800 OWC increased by €293M
Investments in joint ventures and associates 680 687 at €1,030M (7.0% of LTM revenue)
Other non current assets 585 624
Operating Working Capital 737 1,030
Provisions grew slightly
Net cash (debt) (1,220) (1,797)
Shareholders’ equity - Group share 6,635 7,054
Minority interests 178 182
Non current liabilities (excl. net cash (debt)) 2,074 2,221
Provisions 2,958 3,084
Other current liabilities / (assets) net (581) (875)
36 / INVESTOR ROADSHOWS / November 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
H1 2014 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 6,972 236 - - - 7,208
Other operating income / expense (6,408) (7) 15 74 81 (6,245)
Share in profit from joint ventures 18 - - - - 18
Recurring operating income 582 229 15 74 81 981
Other non-recurring operating income and
(10) - - - - (10)
expenses
Profit from operations 572 229 15 74 81 971
Cost of debt (21) - - - - (21)
Foreign exchange gains (losses) 455 (229) (206) - - 20
Other financial income and expense (10) - - - - (10)
Financial income (loss) 424 (229) (206) - - (11)
Income tax expense (335) - 81 (29) (30) (313)
Share in profit from associates 7 - - - - 7
Profit from continuing operations 668 - (110) 45 51 654
Profit (loss) for the period attributable to
(18) - (3) (1) - (22)
non-controlling interests
Profit for the period attributable to
650 - (113) 44 51 632
owners of the parent
37 / INVESTOR ROADSHOWS / November 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.Acquisitions: objectives & criteria
Buy “installed base”
Buy “technology assets”
& “customer access”
HLP Electrical Power Systems
Colombia/Peru RTM322 programme
M&A financial criteria
Cover cost of capital within 3 years (RoCE)
Performance
Post-tax cost of capital of 8%
A deal should be EPS accretive in year 1 ideally. If not, in year 2 (aerospace & defence)
and 9.5% (security)
ROI in the range of 10 to 12%
Net debt/EBITDA around 2.0x. 2.5x max at peak for a limited period of time
Balance
sheet
Interest cover ratio at 6x (= EBIT / Interest expense)
38 / INVESTOR ROADSHOWS / November 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 controls Engine start and controls
Brakes Engine start and
Mechanical Brakes
Thrust reverser controls
Thrust reverser Brakes
Flight controls Flight controls
Thrust reverser
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
39 / INVESTOR ROADSHOWS / November 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 2014 positioning in
+ 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 the
electrification of aircraft
+ Systems equipment
Wiring integration
Broader offering:
+ Support & higher shipset value
Services
PDMS Acquisition
closed in May Complete offering in power 12,000 people in 12 countries
2014 systems
40 / INVESTOR ROADSHOWS / November 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, 2013 As of October 30, 2014
Public French State Public French State
62.8% 22.4% 63.3% 22.0%
Employees
14.7% Employees
14.6%
Treasury shares Treasury shares
0.1% 0.1%
41 / INVESTOR ROADSHOWS / November 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.
42 / INVESTOR ROADSHOWS / November 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.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
43 / INVESTOR ROADSHOWS / November 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.44 / INVESTOR ROADSHOWS / November 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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