Safran Sa · EURONEXT:SAF
Safran Sa — Non-Deal Roadshow (October 2019)
40 slides from Safran Sa's roadshow presentation, October 2019
Slide 1: Roadshow in Canada
ROADSHOW IN CANADA October, 2019 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party without the prior written authorization of Safran
Slide 2: Summary
C2 - Restricted SUMMARY SAFRAN AT A GLANCE STRATEGIC ROADMAP MID-TERM FINANCIAL TARGETS H1 2019 RESULTS 2 Safran Safran - – JournéeinConnaissance Roadshow Groupe Canada - October, 2019 – Safran / 9 janvier 2019 This document and the information therein are the property of Safran. They must not be co
Slide 3: Safran at a glance
C2 - Restricted SAFRAN AT A GLANCE 3 Safran Safran - – JournéeinConnaissance Roadshow Groupe Canada - October, 2019 – Safran / 9 janvier 2019 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party without the prior written autho
Slide 4: Safran at a glance
C2 - Restricted Safran at a glance An international Group of ~92,000, completely focused on Aerospace since Zodiac Aerospace acquisition in 2018 ● 3rd WW Aerospace Group (excl. airframers) ● 2nd WW Aerospace Equipment supplier 3 activities: ● Aerospace Propulsion ● Aircraft Equipment, Defense & Aero
Slide 5: Key figures
C2 - Restricted Key figures ADJUSTED REVENUE (€M) 21,050 ADJUSTED RECURRING OPERATING 3,023 15,355 17,414 15,781 15,953 INCOME (€M) 2,432 2,404 2,192 15,536 2,281 Aerosystems and Aircraft Interiors are fully consolidated in Safran’s financial statements starting March 1,2018 14,363 2,089 1,788 2013
Slide 6: Safran and the capital market
C2 - Restricted Safran and the capital market Equity as of June 30, 2019 Institutional from USA and UK represent more Public than 70% of shareholding 80.9% French State 11.0% Diversified institutional shareholding ● High foreign ownership (essentially US and UK) Number of Employees shares: 6.9% ● Bi
Slide 7: Strategic orientations
C2 - Restricted STRATEGIC ORIENTATIONS 7 Safran Safran - – JournéeinConnaissance Roadshow Groupe Canada - October, 2019 – Safran / 9 janvier 2019 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party without the prior written a
Slide 8: A changing industrial landscape
C2 - Restricted A changing industrial landscape Rapid changes Safran’s responses Technological OEM Define the next upheaval consolidation OEM partner of choice Aerospace state Towards electrical and of the art plane repositioning ● Continued cost ● R&D competitiveness ● Disruptive (productivity, Low
Slide 9: Long term environment issues, major challenges
C2 - Restricted Long term environment issues, major challenges… Global aviation industry: ~2% of global CO2 emissions CORSIA agreement (2016) established challenging targets for the industry: ● Between 2009 and 2020, improving fleet fuel efficiency by 1.5% annually; ● From 2021 to 2035, capping net
Slide 10: Embedded in Safran R&T roadmap and strategy
C2 - Restricted … which are completely embedded in Safran R&T roadmap and strategy Develop high-performance materials and processes +€600M 75% ● Optimizing the propulsion fuel consumption Of R&T in 2022, vs. of R&T focused on ● Reducing the weight of aircraft engines or equipment €317M in 2014 envir
Slide 11: Propulsion OE – LEAP ramp-up
C2 - Restricted Propulsion OE – LEAP, the most challenging ramp-up in the Aerospace history CFM engine deliveries p.a. LEAP: an unparalleled and ground breaking ramp-up 2,500 2500 LEAP 2,000 2000 CFM 56 Meeting all its technological targets: -15% CO2 emissions, -50% noise and NOX 1,500 1500 emission
Slide 12: Propulsion Aftermarket - large and young CFM56 fleet
C2 - Restricted Propulsion Aftermarket - A large and young fleet of installed CFM56 engines CFM56 -5B/-7B Worldwide shop visits LEAP Worldwide shop visits Source: CFM fleet data 3,000 3,000 2,000 2,000 1,000 1,000 0 0 2015 2020e 2025e 2019e 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e In 20
Slide 13: Supplying the full spectrum of propulsion technologies
C2 - Restricted Propulsion – supplying the full spectrum of propulsion technologies Widebodies Niche ● Risk and revenue segments sharing partner of GE ● Regional aircraft: ● CF6 (between 10% and SaM146 engine (core) 19.4%), GE90 (23.7%), ● Bizjet: Silvercrest (full GEnX (between 7.3% engine) and 7.7
Slide 14: Aircraft Equipment, Defense and Aerosystems
C2 - Restricted Aircraft Equipment, Defense and Aerosystems – a comprehensive offering and leadership positions in almost all business segments Electrical & Power Electronics & Defense ● #1 WW for wiring ● #3 WW for inertial navigation ● #2 WW for power systems generation ● #1 European for optronics
Slide 15: Aircraft Interiors – a new business with growth opportunities
C2 - Restricted Aircraft Interiors – a new business with upcoming growth opportunities Seats Cabins ● #1 WW with 30% ● #1 WW for galleys, market share for lateral partition commercial aircraft pannels, carts, passenger seats containers and cabin interiors for regional and business aviation (22% of m
Slide 16: Strategy wrap-up (1/2)
C2 - Restricted Strategy wrap-up (1/2): Safran is well-positioned for success WE HAVE THE KNOW-HOW AND OPERATIONAL EXCELLENCE WE HAVE A BALANCED AND WINNING PORTFOLIO WE HAVE TALENTED PEOPLE WE HAVE A CLEAR ROADMAP FOR THE NEXT 15 YEARS New ambitions ahead: leading the industry and preparing the nex
Slide 17: Strategy wrap-up (2/2): a clear road map
C2 - Restricted Strategy wrap-up (2/2): a clear road map Complete the LEAP success story with best-in-class OE and aftermarket, in cooperation with our partner GE Aviation Successfully integrate Zodiac Aerospace and deliver planned synergies Invest in technologies to bolster our key-leading position
Slide 18: Financial orientations
C2 - Restricted FINANCIAL ORIENTATIONS 18 Safran Safran - – JournéeinConnaissance Roadshow Groupe Canada - October, 2019 – Safran / 9 janvier 2019 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party without the prior written
Slide 19: Our financial guidelines for the Group
C2 - Restricted Summary: our financial guidelines for the Group Strong organic growth, further growth in profitability and cash generation: ● Mid-single digit revenue growth over 2019-2022 with civil aftermarket growing on average at high-single digit ● Recurring Operating Margin trending to a 16%-1
Slide 20: Growth: all businesses are growing
C2 - Restricted Growth Adjusted Revenue (€m) Civil Aftermarket Revenue CFM engines deliveries and Organic Growth (%) (Growth in $) Under Around discussion 10.4% 10%* Zodiac Committed Aero. ~40% ~10% High 2,000 Organic single digit Safran Growth p.a. (%) Mid single digit Mid single digit** 2018 2019e
Slide 21: The CFM56-LEAP transition
C2 - Restricted The CFM56-LEAP transition CFM56 / LEAP Original Equipment (OE) contribution Impact of IFRS15 on transition profile planned (CMD’16) CMD’18 (1) Under IAS18 2015 2016 2017 2018 2019e 2020e+ 2015 2016 2017 2018 2019e 2020e 2021e 2022e Post Under IFRS15 2022e Breakeven +2 years (2) (IFRS
Slide 22: CFM56 / LEAP transition: what's next?
C2 - Restricted CFM56 / LEAP transition: what’s next? Cumulative number of engine deliveries Illustrative impact of price and cost evolution CFM56 / LEAP OE contribution to Gross Margin 40,000 40000 CFM56 35,000 35000 30,000 30000 25,000 25000 20,000 20000 15,000 15000 LEAP 10,000 10000 5,000 5000 0
Slide 23: 2018-2022 ambition for Propulsion
C2 - Restricted 2018-2022 ambition for Propulsion Propulsion Recurring Operating Margin Assumptions 22% >20% Civil Aftermarket growth 20% 18% Completion of the CFM56 / LEAP transition 19.2% 16% 17.7% Narrowbody production rate as committed to airframers 14% IAS18 IFRS15 RTDI: increased impact on P&L
Slide 24: Equipment, Defense and Aerosystems 2018-2022 ambition
C2 - Restricted Equipment, Defense and Aerosystems / 2018-2022 ambition Equipment, Defense & Aerosystems Assumptions Recurring Operating Margin 20% 16% 12.5% >14% Service Revenue Growth 12% Cost reductions 8% Executing on contracts win 4% IAS18 IFRS15 Cost synergies thanks to complementary 0% portfo
Slide 25: Aircraft Interiors 2018-2022 ambition
C2 - Restricted Aircraft Interiors/ 2018-2022 ambition Aircraft Interiors Recurring Operating Margin Assumptions 20% 15% >13% Confirmation of Aircraft Interiors recovery by 2022 10% ● Mid-single digit Revenue growth p.a. ● Current operating margin up to 13% in 2022 5% 0% 2018 2019e 2020e 2021e 2022e
Slide 26: 2018-2022 adjusted operating margin growth
C2 - Restricted 2018-2022 adjusted operating margin growth Group Recurring Operating Margin Opportunities: 20% 16%-18% ● LEAP OE Gross Margin and LEAP Services Margins 15.0% 14.4% 15% ● Civil Aftermarket trend ● Euro / Dollar hedge rate 10% IAS18 IFRS15 Risks: 5% ● LEAP ramp-up execution 2010 2011 2
Slide 27: 2018-2022 strong cash flows from operations
C2 - Restricted 2018-2022 strong cash flows from operations projected at CMD 2018; as a consequence of the 737 MAX grounding, the EBITDA increase should be less linear EBITDA (€M) €Bn Cash from Change R&D FCF 6,000 6000 operations (CFO) in WC Capex 5,000 5000 +0.1 +~50% (7.5) 4,000 4000 12.3 4.9 300
Slide 28: Focus on R&D: new cycle ahead
C2 - Restricted Focus on R&D: new cycle ahead Total R&D Spending (in €M) 2,500 2500 From 2018, new cycle of R&D Exclu. Zodiac Aerospace Incl. Zodiac Aerospace spending: 2000 2,000 ● Assumption: NMA launched Total R&D effort* €1472M ● Catch up on Zodiac 1,500 1500 €1367M €1226M €1123M Increased self-
Slide 29: Focus on Capex
C2 - Restricted Focus on Capex Total Capex spending (in €M) 1200 1,200 MRO network development for LEAP 1,000 1000 Accelerated development 800 of additive manufacturing 600 Catch up on Zodiac 400 200 Total Capex spending around 4% of sales over 2018-2022 0 2015 2016 2017 2018e 2019e 2020e 2021e 2022
Slide 30: Increased cash returns by 2018-2022
C2 - Restricted Increased cash returns by 2018-2022 More dividends driven by higher results €Bn Over 50% of the €2.3bn buyback program already executed, FCF Buybacks Dividends with €1.1bn to go in the next 12/18 months (2.3) ● €522M through 2 buyback tranches announced on March 27th and June 29th (0
Slide 31: H1 2019 Results
C2 - Restricted H1 2019 RESULTS 31 Safran Safran - – JournéeinConnaissance Roadshow Groupe Canada - October, 2019 – Safran / 9 janvier 2019 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party without the prior written authori
Slide 32: H1 2019 overview
C2 - Restricted H1 2019 overview Operations Strong sales organic growth CFM56-LEAP transition on track. New orders and commitments for more than 1,150 LEAP engines, along with long-term services agreement, announced during 2019 Paris Air Show Reorganization of the Equipment businesses, reflecting ex
Slide 33: H1 2019 financial highlights
C2 - Restricted H1 2019 financial highlights Adjusted revenue(1) growth of 27.3% Adjusted recurring operating Strong free cash flow generation Strong organic growth of 14.2% income(1) growth of 35.9% at €1,177M 12,102 1,883 1,177 9,506 +27.3% +35.9% 1,386 +43.5% 820 +14.2% +34.6% org org (1) See sli
Slide 34: H1 2019 income statement
C2 - Restricted H1 2019 income statement (In €M) H1 2018 H1 2019 Revenue 9,506 12,102 Other recurring operating income and expenses (8,202) (10,303) Share in profit from joint ventures 82 84 Recurring operating income 1,386 1,883 Mainly capital gains on a building % of revenue 14.6% 15.6% disposal T
Slide 35: H1 2019 results by activity
C2 - Restricted H1 2019 results by activity Aircraft Aerospace Equipment, Aircraft Holding (In €M) H1 2019 Propulsion Defense & Interiors & others Aerosystems Revenue 12,102 5,902 4,553 1,640 7 Year-over-year growth in % 27.3% 22.8% 22.7% 67.3% na Year-over-year organic growth in % 14.2% 19.0% 8.6%
Slide 36: H1 2019 Free Cash Flow
C2 - Restricted H1 2019 Free Cash Flow (in €M) H1 2018 H1 2019 Of which • Amortization €513M Recurring operating income 1,386 1,883 • Provisions €(17)M • Depreciation €21M One-off items (26) 32 34% increase in EBITDA, driven Amortization, provisions and depreciation (excl. financial) 449 517 by stro
Slide 37: Net debt position
C2 - Restricted Net debt position (in €M) IFRS16 impact > €(529)M of liabilities in net debt Net debt at Net debt at Net debt at position, corresponding to the Dec 31, 2018 Jan 1, 2019 June 30, 2019 value of the rents still to be paid 2018 dividend of €1.82 per share to parent holders (1,290) > €785
Slide 38: 2019 key assumptions adjusted
C2 - Restricted 2019 key assumptions adjusted 2019 outlook is established considering the full application of the new IFRS16 standard. As reminder IFRS16 main impacts are: - Euro (529) million impact of liabilities that are included in net debt position and that represent discounted future lease pay
Slide 39: FY 2019 guidance revised upwards
C2 - Restricted FY 2019 guidance revised upwards for revenue and recurring operating income; FCF refined in a context of uncertainty 2019 guidance is established considering the full application of the new IFRS16 standard and is based on continuing operations (Aerospace propulsion; Aircraft Equipmen
Slide 40: Safran - Economic Conference
C2 - Restricted 40 Safran Safran - Economic Safran - – Conference JournéeinConnaissance Roadshow Canada - March 2019 –4,Safran Groupe - October, 2019 / 9 janvier 2019 This document and the information therein are the property of Safran. They must not be copied or communicated to a third party withou