Safran
Investors roadshow & conference
May 2011
Investors roadshow & conference - May 2011
2
2010 revenue by activities
Revenue €10,760MRecurring op. income €878M (8.2% of revenue)
Net income - Group share €508M (€1.27/share)
Free Cash Flow €934MNet cash position €24M
A tier-1 leader in Aerospace, Defence & SecurityFY 2010 key adjusted figures
A tier-1 equipment supplier providing high-technology & mission critical solutions
26 %
12 %52 %
10 %
Aircraft Equipment
DefenceAerospacePropulsion
Security
Investors roadshow & conference - May 2011
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Recent changes in governance
AGM approved to replace the former dual structure by an unitary structure with a Board of Directors as of April 21, 2011
Membership structure of the Board of Directors15 members including 4 representatives of the French State, 5 independent members (out of them 2 international personalities) and 2 representatives of employees shareholders1 Board advisor
New management structureJP.Herteman - Chairman & CEO3 Deputy CEOs
• Dominique-Jean-Chertier - Corporate Office• Ross McInnes - Finance and risk management• Marc Ventre - Operations
Investors roadshow & conference - May 2011
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Recent business highlights
Team-up with COMAC to provide C919 wiring systems
Supply of the complete integrated nacelle for the A320neo
powered by LEAP-X engine
Issued the 12-digit unique ID numbers for 4.5 million
residents in India
Morpho’s Explosive Detection Solutions meet EU Standard 3
requirements. A major milestone toward implementation across
European airports
Acquired SNPE Matériaux Energétiques
Key achievements
Creating a unified entity in solid rocket propulsion
Investors roadshow & conference - May 2011
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5 key themes
Civil aftermarket and LEAP-X introduction
Productivity improvements in Equipment
External growth in Security
Currency hedging policy
Equity structure
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Creating value from CFM56
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12E 14E 16E 18E 20E
(Num
ber o
f CFM
engin
es)
Number of CFM engines
2010 : 20,000 engines / 500 million flight hours
2020 : 30,000 engines / 1,000 million flight hours
CFM56 spare parts revenue potentially to double by 2020
Investors roadshow & conference - May 2011
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Significant strength in widebody engines services
GE90 fleet in service and global spares revenue ($)
0
100
200
300
400
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100
500
1 000
1 500
GE90 fleet
GE90 sparerevenue %
100 base year 2002
Investors roadshow & conference - May 2011
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Introduction of LEAP-X
COMAC C919
Airbus A320neo
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Improving productivity in equipmentWhile expecting higher volumes on new programs
Grow services (carbon brakes, landing systems, nacelles) as fleet usage continues to pick-up and as installed base continues to grow
Nacelle activity to provide positive contribution in 2011
Expected volume recovery from 2011 in business and regional jets
Continue to improve productivity and reduce cost base
Confident to deliver higher operating margin in Aircraft Equipment by 2012-2013
• Engine nacelles• Wheels & brakes
• Landing gear• Wiring• Power transmission
Worldwide leading positions
Investors roadshow & conference - May 2011
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Secure ID documentsConsolidated since Sept. 2008
100% ownership (€325 m)
2008 2009
Fingerprint ID systemsConsolidated since April 2009
100% ownership (€133 m)
Tomography-based detection systemsConsolidated since Sept. 2009
81% ownership (€407 m)
4 strategic acquisitions in Biometric ID and Detection systems for a total cash-out of over €1.6bn
An attractive investment case consistent with our business modelSecurity becoming a strong third pillar
2010
HomeLand Protection
Biometrics & ID management solutions Closing pending CFIUS approval
100% ownership ($1,091 m)
Investors roadshow & conference - May 2011
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Organic and acquisition-driven growth Fast-paced development of Security
0
200
400
600
800
1000
1200
2007 2008 2009 2010
Revenue from acquisitions (Printrak, GE HLP)Restated revenue at 2008 perimeter (excluding Monetel activity) and excluding contract in Ivory Coast
Average reported growthCAGR2007-10 = ~21%
Average organic growth CAGR2007-10 = ~15%
Revenue (€M) - Security
1,041
904
695
481
Investors roadshow & conference - May 2011
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3.93.92.8
4.34.0
4.5~ 4.7~ 4.7~ 4.7
0
1
2
3
4
5
2009 2010 2011 2012 2013 2014
3-year hedging policySafran significantly increased hedge volumes for 2014
Hedge rates locked-in for 2011 to 2014
2012: $3.9bn achieved at $1.34 to rise to $4.6bn at $1.34as long as €/$<1.65 for most of 2011
2013: $3.9bn achieved at $1.30 to rise to $4.6bn at $1.30 as long as €/$<1.52 for most of 2011
2014: $2.8bn achieved at $1.30 through accumulators and forward sales to rise to $4.5bn at $1.28 as long as €/$<1.52 for most of 2011 and 2012
Hedge portfolio, May 9, 2011
1.34
1.34
1.30
1.28
1.30
1.30
1.381.441.42Achieved
Target
Estimated exposure needsIn US$ bn
€/$ hedge rate
Total: $13.8bn
Investors roadshow & conference - May 2011
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-100
-50
0
50
100
150
200
250
300
350
400
3-year hedging policy
An estimated cumulative €400M tailwind in EBIT over the next 4 years
Currency impact on profitability is around 2/3rd in Propulsion and 1/3rd in Equipment; non material for Defence and Security businesses
Estimated impact on recurring operating incomeof targeted €/$ hedge rates
Material tailwind in profitability expected over 2011-2014
102134
(44)
75
1.42
1.44
1.38
1.30
2009 2011E 2012E
1.34
2013E 2014E
108
1.28
2010
200
100
0
-100
EBIT impactvs. previousyear (in €M)
1.2
1.3
1.4
1.1
1.35
1.25
1.15
1.05
1
€/$hedge
rate
300
56
Investors roadshow & conference - May 2011
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As of Dec. 31, 2009
French State30.2%
Areva7.4%
Public38.1%
Treasury shares4.2% Employees
20.1%
Equity shareholdingFree float increased by 9.8 points over 15 months
As of April 30, 2011
French State30.2%
Areva2.0%
Public47.9%
Treasuryshares3.3%
Employees16.6%
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Note: 2011 outlook does not include any contribution from L-1 Identity Solutions and SNPE Matériaux Energétiques
Revenue expected to increase by at least 5%at an estimated average spot rate of USD 1.33 to the Euro
Recurring operating income expected to increase by at least 20%at a hedge rate of USD 1.38 to the Euro
Free cash flow expected to represent about a third of the recurring operating income taking into account an expected increase in OWC and R&D investments
2011 outlook
[ Q1 2011 up 10.5% ]
Investors roadshow & conference - May 2011
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Safran
Additional Information
Investors roadshow & conference - May 2011
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Safran
FY 2010 Financials
Investors roadshow & conference - May 2011
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FY 2010 financial highlightsSolid operating leverage
Growing revenue with strongperformance in Defence and Security
FY 09 FY 10
10,448 10,760+3.0%
Recurring operating income at 8.2% of revenue highlighting good control
of cost base
FY 10
729878+20%
Higher net profit (group share) at €1.27 per share
FY 09restated
FY 10
395508+29%
Net cash positive. Driven by better-than-expected WC
and very strong operating CFFY 09 FY 10
(498)
24
+€522 M
Proposed 2010 dividend up 32% vs. 2009
FY 09 FY 10
0.38
0.50+32%
(€M) (€M) (€M)
(€)
(€M)
FY 09restated
Investors roadshow & conference - May 2011
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FY 2010 income statement
Of which cost of net debt of €(36)M
3760.94
(174)(98)
(4)(14)
3
6636.3%
6986.7%
10,448
FY 2009reported
5081.27
3950.99
Profit - group shareBasic EPS* (in €)
(168)(173)
(5)(20)
9
(174)(108)
(4)(16)
3
Net finance (cost) incomeIncome tax expenseProfit (loss) from discontinued op.Minority interestsShare in profit from associates
8658.0%
6946.6%
Profit from operations% of revenue
8788.2%
7297.0%
Recurring operating income% of revenue
10,76010,448Revenue
FY 2010FY 2009restated(In €M)
EPS growth of 28%
* Based on 399,552,920 shares
Effective tax rate of 25%
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(3)179182Capitalized expenses
(50)458508Recorded as operating expenses
(0.7)pt5.9%6.6%% of revenue
(7.7)%637690Total self-funded R&D(before tax credit*)
ChangeFY 2010FY 2009(In €M)
(159)406565Ebit impact after R&D tax credit *
(133)530663Ebit impact before R&D tax credit *
(83)72155Amortisation / depreciation
(50)458508Recorded as operating expenses
ChangeFY 2010FY 2009(In €M)
Research & Development
R&D effort maintained with normative trend at 6 to 7% of revenue
Tailing off of R&D developmentson SJ100, A400M and B787
Increasing R&D developments on LEAP-X engine as well as A350 program
Tax credit* impact of €124M in 2010vs. €98M in 2009
* “Crédit Impôt Recherche” in France & Canada
R&D effort maintained, lower impact on EBIT
Of which €71M impairment charge on B787 in 2009
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Aerospace Propulsion
Mild decline in revenue
Growth in services for military, helicopters & high trust engines
Lower OE deliveries (military, helicopters, high thrust engines)
Soft but improving CFM aftermarket
Growing profits despite CFM aftermarket softness
Aftermarket (military, high trust engines)
Impact of better OE CFM unit revenue
Productivity improvements
Slight adverse currency effect
R&D: tailing off of SaM146 and TP400; increasing efforts on LEAP-X
102145Capex (tangible assets)
9884Capitalized expenses
233252Recorded as opex
5.9%5.9%% of revenue
331336Total self-funded R&Dbefore tax credit
FY 2010FY 2009(In €M)
-29One-off items
+0.7pt11.8%11.1%% of revenue
5.6%663628Recurring operating income
11.8%
663
5,604
FY 2010
(1.2)%
Change
(3.1)%5,673Revenue
11.6%% of revenue
657Profit (loss) from op.
Organic Change
FY 2009restated(In €M)
Key figures
Investors roadshow & conference - May 2011
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Aircraft Equipment
Revenue back to growth
Driven by new programs (B787) and stabilization in business and regional jets segment
Offset by lower nacelle activity
1-month consolidation of HCM
Recovery plan delivering results
Drastic reduction of losses in nacelles (reached operating breakeven in Q4 2010)
A 380 : lower volumes, improved production costs, commercial agreement with Airbus
B 787 : higher volumes, commercial agreement with Boeing
Repair & Overhaul on landing systems
6186Capex (tangible assets)
4565Capitalized expenses
6780Recorded as opex
4.0%5.2%% of revenue
112145Total self-funded R&Dbefore tax credit
FY 2010FY 2009(In €M)
(2) (71)One-off items
+1.9pt4.5%2.6%% of revenue
74%12773Recurring operating income
4.4%
125
2,834
FY 2010
2.4%
Change
Flat2,767Revenue
ns% of revenue
2Profit (loss) from op.
Organic Change
FY 2009restated(In €M)
Key figures
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Defence
Over 30% growth in Optronics with a favourable volume/price impact on profits
Felin, long-range IR goggles, thermal cameras, …
Avionics: mild decline in revenue, impacting profits in flight control systems
Further incremental costs to put in place Safran Electronics
6735Capex (tangible assets)
1833Capitalized expenses
91113Recorded as opex
8.8%13.8%% of revenue
109146Total self-funded R&Dbefore tax credit
FY 2010FY 2009(In €M)
--One-off items
+3.6pts4.4%0.8%% of revenue
511%559Recurring operating income
4.4%
55
1,240
FY 2010
16.9%
Change
12.4%1,061Revenue
0.8%% of revenue
9Profit (loss) from op.
Organic Change
FY 2009restated(In €M)
Key figures
Of which €(35)M loss at completion on A400M
navigation systems in 2009
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(4) -One-off items
+2.8pts12.3%9.5%% of revenue
49%12886Recurring operating income
11.9%
124
1,041
FY 2010
15.2%
Change
(6.0)%904Revenue
9.5%% of revenue
86Profit (loss) from op.
Organic Change
FY 2009restated(In €M)
Security
Revenue and profit growth benefited from acquisitions (mainly detection)
Adverse impact in 2010 of anticipated lower revenue of Identification government contract in Ivory Coast now tailing off
Except Ivory Coast :
Organic revenue growth (+7%)
Very good performance for Identification (Albania, Mexico, Kazakhstan) and smart cards activities (volume, improved production costs)
Continued investment in India
MorphoDetection delivered results in line with initial targets
2818Capex (tangible assets)
18-Capitalized expenses
6763Recorded as opex
8.2%7.0%% of revenue
8563Total self-funded R&Dbefore tax credit
FY 2010FY 2009(In €M)
Key figures
Investors roadshow & conference - May 2011
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(in €M)
(498)
317
Dividend
1,142(251)
Net cash position
Cash flow from operations is 1.30x EBIT
Dividend to parent holders was €152M (€0.38 per share)
€100M cash-out for the HCM acquisition
Net debt at Dec 31, 2009
Cash flowfrom ops
Others
Net cash at Dec 31, 2010
Change in WC
Tangible & Intangible
Capex
€934M Free Cash Flow
(161)
24
Preserving our financial flexibility
(525)
o/w €(100)M HCM acquisition
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Safran
Q1 2011 Financials
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Q1 2011 financial highlightsSolid revenue growth
Q1 2010 Q1 2011
2,426
2,681
(€M)
+10.5%
Healthy recovery in civil aftermarket (+12.3% in $)Significant strength in widebody engine services
Lagging recovery in the narrowbody segment
Original equipment up 7% in aerospace (Propulsion and Equipment)
2-digit revenue contribution from:Equipment (nacelles)
Defence (optronics)
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Q1 2011 revenue
10.5%
na
4.5%
19.2%
15.2%
8.5%
Change
reported
2,681
4
233
292
729
1,423
Q1 2011
na14Others
2.3%223Security
7.1%2,426Total revenue
15.1%245Defence
9.8%633Aircraft Equipment
6.0%1,311Aerospace Propulsion
Change
organicQ1 2010Adjusted data
(in €M)
Main drivers
Civil aftermarket as well as services for helicopters engines
Nacelles (A380, regional jets)
Contribution of Labinal Salisbury
50%+ growth in Optronics driven by program revenue recognition
Security
7% organic growth excluding Ivory Coast impact
Mix and regulatory pricing pressure in detection specific to this quarter
Positive growth across all businesses
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-
(4)%
166%
57%
322
199
24
94
324
207
9
60
Number of deliveries
1. CFM56 engines
2. Helicopter engines
3. A380 nacelles
4. Small nacelles (biz & regional jets)
Aerospace OE
21,144
58.0%
Q1 2011
4.8%
3.1 pts
20,173
54.9%
Total installed base
Share of 2nd gen. engines
ChangeQ1 2010CFM56 engines
7.5%1,1791,097OE revenue* Prop. & Equipment (in €M)
Increased share of 2nd generation CFM engines in fleet
future flow of high value services
1. Stable CFM56 deliveries
2. Some stabilization in helicopters
3. Ramp up of Airbus A380 deliveries
4. Improvement of the regional jets segment
* Including revenue from R&D contracts and miscellaneous
OE growth driven by new programs
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PropulsionCivil aftermarket up 12.3% in $
Improvement in worldwide CFM56 spare part revenue (+6.3% in $ vs. Q1 2010); stronger growth expected in the latter part of the year
Significant strength in high thrust widebody engine spares (e.g. GE90 on B777)Good contribution from helicopter and military engines aftermarket
EquipmentGrowth mainly driven by landing systems activity as installed base continued to grow
* Including spares and maintenance & repair activities
Aerospace services
14.9%973847Total services revenue
8.3%(2.1)pts
23532.3%
21734.4%
Aircraft EquipmentServices share of total revenue
73851.8%
Q12011
17.1%3.6pts
63048.2%
Aerospace PropulsionServices share of total revenue
ChangeQ1 2010
Services* revenue(in €M)
Healthy recovery in civil aftermarket
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Safran
Conclusion
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Safran
Questions & Answers
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