Thales Sa · EURONEXT:HO
Thales Sa — H1 2011 Earnings Presentation
39 slides from Thales Sa's earnings presentation, Jul 27, 2011
Slide 1: 2011 Half Year Results
2011 Half Year Results 27 July 2011 July 2011
Slide 2: Agenda
2 / Agenda 1. H1 2011 highlights 2. Financial review 3. Outlook This presentation may contain forward-looking statements. Such forward-looking statements are trends or objectives, as the case may be, and shall not be construed as constituting forecasts regarding the Company’s results or any other pe
Slide 3: H1 2011 highlights
H1 2011 highlights July 2011
Slide 4: Overview
4 / Overview Thales transformation is steadily going on… Improved operating profitability A400M amendment finalised Continued focus on project execution Probasis on track … despite the environment remaining volatile Confirmed upturn of commercial aeronautics Opportunities in emerging markets vs. pre
Slide 5: Difficult programs: back under control
5 / Difficult programs: back under control Global agreement signed with Airbus A400M on technical, operational and Flight Management System commercial issues – July 2011 Meltem Amendment agreement signed with Maritime patrol aircraft – Turkey Turkish MoD – March 2011 Ticketing Amendment agreement si
Slide 6: Probasis
6 / Probasis Non-quality costs Supply chain Procurement: more pooled purchasing Product policy: increasing commonality of building blocks SG&A Restructuring plans ongoing Shared service centres Confirmed 2011 target: 50% progress of the plan July 2011
Slide 7: H1 11 key financial figures
7 / H1 11 key financial figures Defence & Aerospace & in €m Other Total Security Transport H1 11 H1 10 H1 11 H1 10 H1 11 H1 10 H1 11 H1 10 Order intake 2,531 2,605 2,690 2,514 20 25 5,241 5,144 Revenues 3,288 3,401 2,640 2,520 40 34 5,968 5,955 EBIT(*) 202 207 110 7 (9) (10) 303 204 in % of revenues
Slide 8: Financial review
Financial review July 2011
Slide 9: Selected key orders
9 / Selected key orders +2% Total: €5,144m Total: €5,241m €371m Unit value over €100m: €786m In-flight entertainment systems (confid.) €1,710m "Balard" project – new MoD complex €1,409m (France) Galileo (ESA) Other orders: €3,063m €3,046m QE-class carriers (UK) Bushmaster (Australia) Munitions (US)
Slide 10: EBIT margin
10 / EBIT margin in €m H1 2011 H1 2010 change reported organic Order intake 5,241 5,144 +2% +2% Revenues 5,968 5,955 +0% +0% Gross margin 1,383 1,250 +11% +10% in % of revenues 23.2% 21.0% Indirect costs (1,002) (999) +0% +0% in % of revenues 16.8% 16.8% o/w R&D expenses (291) (274) +6% +7% in % of
Slide 11: EBIT bridge
11 / EBIT bridge 18 16 91 31 60 13 303 5.1% 204 3.4% H1 10 EBIT (* ) Scope & FX Negativ e cost Contract mix & Add'l P&L Impact of Add'l restruct. H1 11 EBIT (* ) v ariances on other expensed R&D research tax charges projects (organic) credit reform H1 10 (* * ) (*) Before purchase price allocation (
Slide 12: R&D
12 / R&D Capitalised R&D costs (€m) 80 64 48 Total self funded R&D (€m) 40 303 292 293 18 269 2 250 0 H1 2008 H1 2009 H1 2010 H1 2011 Net P&L impact of capitalised R&D costs (€m) 125 38 40 27 0 H1 2011 vs H1 2008 20 90 bp negative P&L impact H1 2008 H1 2009 H1 2010 H1 2011 -3 -16 0 H1 2008 H1 2009 H
Slide 13: Net result
13 / Net result in €m H1 2011 H1 2010 EBIT (*) 303 204 Impairment of non-current operating assets (4) (4) Net capital gains (losses) and others 8 (7) Income of operating activities (*) 307 193 Cost of net financial debt (25) (30) Other financial results (32) (4) Other components of pension charges (
Slide 14: Defence & Security: H1 key figures
14 / Defence & Security: H1 11 key figures in €m H1 2011 H1 2010 change reported organic Order intake 2,531 2,605 -3% -3% Order book at 30 June 13,365 14,310 (**) -7% -5% Revenues 3,288 3,401 -3% -4% Restructuring costs (49) (17) x3 EBIT (*) 202 207 -3% -7% in % of revenues 6.1% 6.1% (*) Before purc
Slide 15: Aerospace & Transport: H1 key figures
15 / Aerospace & Transport: H1 11 key figures in €m H1 2011 H1 2010 change reported organic Order intake 2,690 2,514 +7% +8% Order book at 30 June 10,898 11,022 (**) -1% +0% Revenues 2,640 2,520 +5% +5% Restructuring costs (26) (27) -4% EBIT (*) 110 7 x15 in % of revenues 4.2% 0.3% (*) Before purcha
Slide 16: Cash flow – Net debt
16 / Cash flow – Net debt Free operating cash flow (in €m) (*) Net debt (in €m) H1 2008 H1 2009 H1 2010 H1 2011 30/06/08 30/06/09 30/06/10 30/06/11 -20 -175 -265 -595 -365 -457 -886 -912 Encouraging FOCF for a first half Strongly improved net debt vs. 30 June 2010 (*) FOCF = Operating cash flow plus
Slide 17: Outlook
Outlook July 2011
Slide 18: Objectives
18 / Objectives A book-to-bill ratio around 1 Slightly growing revenues Stable in Defence & Security Stronger in Aerospace & Transport EBIT(*) 2011: objective of 5% consolidated after restructuring charges of about 1.5% 2012: objective of 6% after restructuring charges of about 1% Objectives confirm
Slide 19: Leveraging our position on dual markets
19 / Leveraging our position on dual markets Civil/military dual markets Ground Aeronautics Space Security Defence Transportation Shared technologies Our mission : enable our customers to rapidly make the right decision in critical and complex environments July 2011
Slide 20: Grow internationally
20 / Grow internationally Target growth regions Develop China GDP 2012 : +9,5% existing subsidiaries Middle East Mexico GDP 2012 : +5% Set up GDP 2012: +4% Defence budget : +5% Defence budget: +4% partnerships Southeast Asia GDP 2012: + 5,7% Defence budget: +10% Empower local management Brazil India
Slide 21: Strengthen our offering
21 / Strengthen our offering Accelerate innovation Transverse technologies 4 Key Technological Domains Rationalise global product policies Comprehensive action plan across the company Developing common "building blocks" Reducing development risks July 2011
Slide 22: Improve our performance
22 / Improve our performance Probasis Sustain efficiency Bridge the profitability gap with European peers 50% progress by end 2011 Confirmation of a €1.3bn gross savings target by 2014 Chorus 2.0 Thales "common language" Probasis: on track, delivering results July 2011
Slide 23: A value-creating strategy
23 / A value-creating strategy Grow internationally Strengthen our offering Improve our performance Develop our position Accelerate innovation, on growth markets develop transverse Harmonise technological synergies the way we work Increase local value added Streamline Develop more rigorous our produ
Slide 24: Annexes
Annexes July 2011
Slide 25: Upcoming events
25 / Upcoming events Q3 and 9m revenues 8 November 2011 FY11 revenues 7 February 2012 FY11 results 6 March 2012 July 2011
Slide 26: Order intake by destination
26 / Order intake by destination Order intake by destination change in €m H1 2011 H1 2010 reported organic RoW France 1,438 1,074 +34% +34% Middle East 4% UK 412 536 -23% -22% 8% France Rest of Europe 1,455 1,436 +1% +1% Asia 27% 7% Europe 3,305 3,046 +9% +9% Australia North America 566 610 -7% -6%
Slide 27: Revenues by destination
27 / Revenues by destination Revenues by destination change in €m H1 2011 H1 2010 reported organic +21% +21% RoW France 1,588 1,309 Middle East 5% UK 732 767 -5% -3% 8% France Rest of Europe 1,497 1,530 -2% -3% 26% Asia 9% Europe 3,817 3,606 +6% +6% North America 580 590 -2% +0% Australia +11% +3% 5
Slide 28: Area A: key figures
28 / Area A: key figures in €m H1 2011 H1 2010 change reported organic Order intake 1,653 1,766 -6% -6% Order book at 30 June 7,586 8,325 (**) -9% -4% Revenues 2,009 2,073 -3% -3% Restructuring costs (11) (10) EBIT (*) 90 95 -6% -8% in % of revenues 4.5% 4.6% (*) Before purchase price allocation (PP
Slide 29: Area B: key figures
29 / Area B: key figures in €m H1 2011 H1 2010 change reported organic Order intake 947 1,067 -11% -11% Order book at 30 June 4,015 4,250 (**) -6% -5% Revenues 1,178 1,184 -1% +0% Restructuring costs (7) (11) EBIT (*) 15 49 -70% -70% in % of revenues 1.2% 4.1% (*) Before purchase price allocation (P
Slide 30: France: key figures
30 / France: key figures in €m H1 2011 H1 2010 change reported organic Order intake 2,641 2,308 +14% +14% Order book at 30 June 12,734 12,843 (**) -1% -1% Revenues 2,782 2,695 +3% +3% Restructuring costs (59) (23) x2.5 EBIT (*) 217 62 x3.5 in % of revenues 7.8% 2.3% (*) Before purchase price allocat
Slide 31: Free operating cash flow
31 / Free operating cash flow in €m H1 2011 H1 2010 Operating cash flow 500 390 Change in WCR & contigency reserves (575) (633) Payment of pension benefits and scheme (50) (35) settlements Income tax paid (32) (38) Net operating cash flow (157) (316) Net operating investments (108) (141) o/w capital
Slide 32: Net cash flow – Net debt
32 / Net cash flow – Net debt in €m H1 2011 H1 2010 Free operating cash flow (265) (457) Net (acquisitions) / disposals (18) (5) Deficit payments on pensions in the UK (29) (32) Dividends (14) (98) Net cash flow (326) (592) in €m (Net debt) / Net cash - 31 December 2010 191 Net cash flow (326) Sale
Slide 33: R&D
33 / R&D in €m H1 2011 H1 2010 H1 2009 P&L expense 291 274 255 Capitalised R&D 2 18 48 Total R&D funding 293 292 303 Impact of capitalisation on the P&L in €m H1 2011 H1 2010 H1 2009 Capitalised R&D 2 18 48 Amortisation charge (18) (21) (21) Net impact on EBIT (*) (16) (3) 27 Net impact on margin -0
Slide 34: PPA impact
34 / PPA impact in €m H1 2011 PPA H1 2011 before PPA (*) impact reported Order intake 5,241 0 5,241 Order book at 30 June 24,335 0 24,335 Revenues 5,968 0 5,968 EBIT 303 (36) 268 in % of revenues 5.1% 4.5% Income tax (65) 12 (53) Equity in unconsolidated affiliates 24 (4) 20 Net income (Group share)
Slide 35: Order intake Q2 2011
35 / Order intake Q2 2011 Q2 2011 Q2 2010 change in €m reported organic Defence & Security 1,557 1,329 +17% +18% Aerospace & Transport 1,732 1,440 +20% +23% Others 9 8 Total 3,298 2,777 +19% +21% Q2 2011 Q2 2010 change in €m reported organic Area A 1,087 847 +28% +35% Area B 500 551 -9% -9% France 1
Slide 36: Revenues Q2 2011
36 / Revenues Q2 2011 Q2 2011 Q2 2010 change in €m reported organic Defence & Security 1,907 2,008 -5% -5% Aerospace & Transport 1,520 1,452 +5% +7% Others 22 17 Total 3,449 3,477 -1% +0% Q2 2011 Q2 2010 change in €m reported organic Area A 1,119 1,167 -4% -1% Area B 667 688 -3% -2% France 1,664 1,6
Slide 37: Main programmes in backlog
37 / Main programmes in backlog Amount Programme More than €600m Iridium (USA) Rafale (France) Fremm Frigates (France/Italy) Between €400 and €600m QE-class aircraft carrier (UK) Between €200 and €400m London Underground signalling (UK) Watchkeeper (UK) Sentinel 3 Satellite (France) CSO observation
Slide 38: Details of reporting structure
38 / Details of reporting structure FY2009 reporting structure* Reporting structure since 2010* Aerospace/Space Defence & Security Space Space Avionics (commercial and military) Communications and C4I systems Defence & In Flight Entertainment IT security Security C4I Electronic warfare Aerospace Pro
Slide 39: www.thalesgroup.com
www.thalesgroup.com THALES - 45, rue de Villiers – 92526 Neuilly-sur-Seine Cedex – France July 2011