Safran Sa · EURONEXT:SAF
Safran Sa — Non-Deal Roadshow (September 2017)
41 slides from Safran Sa's roadshow presentation, September 2017
Slide 1: Investor Roadshows September 2017
INVESTOR ROADSHOWS SEPTEMBER 2017 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: Disclaimer
Disclaimer > IMPORTANT ADDITIONAL INFORMATION This document is not intended to and does not constitute an offer to sell or the solicitation of an offer to subscribe for or buy or an offer to purchase or the solicitation of an offer to sell any securities or the solicitation of any vote or approval i
Slide 3: Foreword
Foreword All figures in this presentation represent adjusted data (1) and continuing operations (2). 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
Slide 4: Summary of H1 2017 earnings
3 themes Summary of H1 2017 earnings The CFM56 – LEAP transition FX hedging Investor roadshows | September 2017 4 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 5: H1 2017 financial highlights (H1 2016 restated for IFRS 5)
H1 2017 financial highlights (H1 2016 restated for IFRS 5) Increase in adjusted revenue (+2.4% org) driven Adjusted recurring operating income at 15.2% of Free cash flow generation representing by Aerospace services and Defense revenue, with strong improvements in Aircraft 55% of adjusted recurring
Slide 6: CFM commercial success
CFM commercial success 2017 Paris Airshow key takeaways 1,063 LEAP and CFM56 ordered, in addition to LEAP and CFM56 services agreements Launch of the 737 MAX 10 by Boeing powered by LEAP-1B; EIS planned in 2020 CFM56 389 orders received in H1 LEAP-1B powered 737 MAX (Paris Airshow 2017) Tota
Slide 7: Update on LEAP program
Update on LEAP program Executing on production ramp-up 147 LEAP sold in H1 2017 compared to 11 engines in H1 2016 > Beginning of LEAP-1B production ramp up: 27 deliveries > Continuing ramp up of LEAP-1A production: 120 deliveries LEAP-1A In operations at 15 airlines with more than 190,000 flight
Slide 8: H1 2017 business highlights
H1 2017 business highlights CFM56 production ramping down, as expected 710 CFM56 deliveries in H1 2017, down from 886 engines in H1 2016 Helicopter turbines: Ardiden 3G powering the Russian Helicopter’s KA62 Engine type certification granted by EASA The helicopter made its official maiden flig
Slide 9: Continuing momentum in Aerospace services in H1 2017
Continuing momentum in Aerospace services in H1 2017 Growth in Aircraft Equipment services of 7.4% (in €) Growth driven by carbon brakes, landing gear MRO and services for nacelles Civil aftermarket in Propulsion up 8.4% (in $) 2017 yoy change: Q1 +17.7%; Q2 flat > Q2 had a strong comparison bas
Slide 10: Finalisation of Safran Identity & Security disposal
Finalisation of Safran Identity & Security disposal Reminder: in application of IFRS 5, all the businesses comprising the Security activities are classified as “discontinued operations” for 2016 and 2017. H1 2016 restated. In H1 2017, Safran completed the sale of all the Security activities Sale o
Slide 11: H1 2017 profit from operations
H1 2017 profit from operations H1 2016 (In €M) H1 2017 Restated for IFRS 5 Revenue 7,987 8,038 Adjusted recurring operating income 1,230 1,218 % of revenue 15.4% 15.2% Total one-off items (13) (16) Transaction costs Capital gain (loss) on disposals - - Impairment reversal (charge) - - Other infreque
Slide 12: H1 2017 income statement
H1 2017 income statement (In €M) H1 2016 H1 2017 Restated for IFRS 5 Revenue 7,987 8,038 Other recurring operating income and expenses (6,776) (6,912) Share in profit from joint ventures 19 92 Of which cost of debt Recurring operating income 1,230 1,218 of €(28)M % of revenue 15.4% 15.2% Total one-o
Slide 13: H1 2017 revenue
H1 2017 revenue In €M +0.6% 7,987 189 8,176 161 8,337 (299) 8,038 Organic growth: +2.4% Driven by Propulsion services, Aircraft Equipment and Defense Currency impact: +2.0% Stronger average spot rate in H1 2017 vs H1 2016 +2.4% Changes in scope: (3.8)% Contribution of Safran’s space launcher a
Slide 14: H1 2017 recurring operating income
H1 2017 recurring operating income In €M (1.0)% Main profitability drivers 1,230 (135) 1,095 84 1,179 39 1,218 Growth in Propulsion services Increased profitability of Aircraft Equipment and Defense Productivity gains and cost reductions Positive impact of hedged $ Main offsetting factors
Slide 15: Research & Development
Research & Development H1 2016 (In €M) H1 2017 Change (restated for IFRS 5) Total R&D (892) (756) 136 External funding 351 249 (102) Decrease of self-funded cash Total self-funded cash R&D (541) (507) 34 R&D as a % of revenue (0.5)pt Decline of self-funded R&D driven by 6.8% 6.3% LEAP Tax credit 7
Slide 16: H1 2017 results by activity
H1 2017 results by activity Holding (In €M) H1 2017 Propulsion Equipment Defense & others Revenue 8,038 4,691 2,715 624 8 Year-over-year growth in % 0.6% (3.4)% 6.8% 6.8% na Recurring operating income 1,218 849 327 40 2 as a % of revenue 15.2% 18.1% 12.0% 6.4% na recurring operating margin variation
Slide 17: H1 2017 Free Cash Flow
H1 2017 Free Cash Flow (in €M) H1 2016 H1 2017 Restated for IFRS 5 Adjusted attributable net profit 862 1 606 Of which post-tax capital gain on Security activities - (766) Of which • Depreciation €81M Depreciation, amortization, provisions and others 458 470 • Amortization of tangibles and intangibl
Slide 18: Net debt position
Net debt position (in €M) Net debt at Net cash at 2016 final dividend of €0.83 per Dec 31, 2016 June 30, 2017 share to parent holders Acq/divestments Share buybacks > Objective: neutralizing the dilutive 3,044 1,560 effect of equity-related instruments on Safran balance sheet > Started in December 2
Slide 19: Full-year 2017 outlook confirmed
Full-year 2017 outlook confirmed Safran expects for 2017 on a full-year basis: Adjusted revenue to grow in the range 2% to 3% (at an estimated average rate of USD 1.10 to the Euro). Excluding the effect of the equity accounting of ArianeGroup from July 1, 2016 revenue growth is expected to be in t
Slide 20: The CFM56 – LEAP transition
3 themes Summary of H1 2017 earnings The CFM56 – LEAP transition FX hedging Investor roadshows | September 2017 20 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 21: LEAP – right on track
LEAP – right on track 2012 2013 2014 2015 2016 2017 Design 1st engine FTB 1st flight EIS freeze to test LEAP-1A Airbus A320neo 15 airlines operating LEAP-1A* Design 1st engine FTB 1st flight EIS freeze to test LEAP-1B Boeing 737 MAX 3 airlines operating LEAP-1B* Design 1st engine 1st flight FTB Roll
Slide 22: LEAP – ramp-up
LEAP – ramp-up NUMBER OF ENGINES PRODUCED CFM56 production record level in 2016 2,000+ LEAP production will reach a 30% higher rate Everything in place to manage 1,693 1,612 2 000+ a smooth transition and ramp-up 1,650+ 650+ Target: 450-500 1,612 612 engines Large volumes and steep ramp-up are a
Slide 23: LEAP – ramp-up
LEAP – ramp-up 100% of suppliers are well known vendors and aero suppliers – 80% are common with CFM56 Redundancy and/or buffer stock for 100% of parts 85% of parts are double sourced Suppliers Selection - based on three main criteria: Supply Chain performance, Growth capacity (including financi
Slide 24: Transitioning from CFM56 to LEAP
Transitioning from CFM56 to LEAP 2016-2020 trends (CMD’16) 2017 impact consistent with trends Gradual reduction of CFM56 contribution FY 2017 > Propulsion EBIT to be negatively impacted in the range of €300-350M by CFM56-LEAP transition compared to 2016 Transitory losses on Leap OE due to > Lower
Slide 25: FX hedging
3 themes Summary of H1 2017 earnings The CFM56 – LEAP transition FX hedging Investor roadshows | September 2017 25 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 26: FX hedging: $16.5bn hedge portfolio (July 25, 2017)
FX hedging: $16.5bn hedge portfolio* (July 25, 2017) 2018 Yearly exposure: $7.5bn to $8.0bn Increasing level of net USD exposure for 2017-20 in line with the Fully hedged at 1.18 growth of businesses with exposed USD revenue 2019 $2.8bn achieved through forward sales and short dated knock out op
Slide 27: FX hedging
FX hedging 2017-2018 hedge rate 2019 hedge rate > Fully secured: 1.21 for 2017, 1.18 for 2018 > Target range fully secured: 1.15-1.18 > No impact from the evolution of the €/$ spot rate > €/$ spot level (and its impact on the portfolio) will only determine whether the top or the bottom of the target
Slide 28: Safran has flexibility in its hedging policy
Safran has flexibility in its hedging policy Hedging policy > Safran does not apply “hedge accounting” due to the constraints of IAS39 and the nature of the hedging instruments used > Portfolio of hedging instruments covers net exposure to exchange rate risk for multiple years > Protection economic
Slide 29: Additional Information
ADDITIONAL INFORMATION 29 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 30: Aerospace Propulsion
Aerospace Propulsion Organic (In €M) H1 2016 H1 2017 Change Change Revenue 4,857 4,691 (3.4)% 0.9% Recurring operating income 942 849 (9.9)% % of revenue 19.4% 18.1% (1.3)pt One-off items 5 - Profit (loss) from operations 947 849 % of revenue 19.5% 18.1% Revenue Services grew 7.5% : growth driven
Slide 31: Aircraft Equipment
Aircraft Equipment Organic (In €M) H1 2016 H1 2017 Change Change Revenue 2,542 2,715 6.8% 4.2% Recurring operating income 271 327 20.7% % of revenue 10.7% 12.0% +1.3pt One-off items (2) - Profit (loss) from operations 269 327 % of revenue 10.6% 12.0% Revenue OE grew 6.5%: higher A350, A330, A320ne
Slide 32: Defense
Defense Organic (In €M) H1 2016 H1 2017 Change Change Revenue 584 624 6.8% 5.8% Recurring operating income 22 40 81.8% % of revenue 3.8% 6.4% +2.6pt One-off items - - Profit (loss) from operations 22 40 % of revenue 3.8% 6.4% Revenue Growth driven by guidance kits, Patroller, optronics equipment o
Slide 33: FX
FX Translation effect: foreign currencies translated into € Average spot rate H1 2016 H1 2017 Positive impact mainly from USD $1.12 $1.08 Impact on Revenues and Return on Sales Hedge rate Transaction effect: mismatch between $ sales and € costs is hedged H1 2016 H1 2017 Positive impact from he
Slide 34: Consolidated and adjusted income statements
Consolidated and adjusted income statements Currency hedging Business combinations H1 2017 reconciliation (continuing Amortization Consolidated of intangible PPA impacts - Adjusted operations) data Re-measurement Deferred hedging data assets - other business (In €M) of revenue loss/gain Sagem/Snecma
Slide 35: Balance sheet highlights
Balance sheet highlights Dec 31, June 30, (In €M) 2016 2017 Goodwill 1,864 1,845 Tangible & Intangible assets 8,347 8,620 Investments in joint ventures and associates 2,175 2,097 Good control of Operating Other non current assets 1,733 769 Working Capital Operating Working Capital 700 649 Net cash p
Slide 36: Equity shareholding
Equity shareholding As of Dec 31, 2016 As of June 30, 2017 Public 76.3 % French State Public 14.0% 76.4 % French State 14.0% Employees 9.2 % Employees 7.7 % Treasury shares 0.5 % Treasury shares 1.9 % Investor roadshows | September 2017 36 This document and the information therein are the property o
Slide 37: H1 2017: R&D by activity
H1 2017: R&D by activity (In €M) H1 2017 Propulsion Equipment Defense Total self-funded cash R&D (507) (356) (87) (64) as a % of revenue 6.3% 7.6% 3.2% 10.3% Tax credit 74 30 25 19 Total self-funded cash R&D after tax credit (433) (326) (62) (45) Gross capitalized R&D 135 78 32 25 Amortised R&D (65)
Slide 38: H1 2016: R&D by activity
H1 2016: R&D by activity (In €M) H1 2016 Propulsion Equipment Defense Total self-funded cash R&D (541) (378) (102) (61) as a % of revenue 6.8% 7.8% 4.0% 10.4% Tax credit 71 30 22 19 Total self-funded cash R&D after tax credit (470) (348) (80) (42) Gross capitalized R&D 160 103 39 18 Amortised R&D (4
Slide 39: Aerospace OE / Services revenue split
Aerospace OE / Services revenue split Reported change of Propulsion OE revenue From July 1, 2016, the space launcher business no longer contributes to Aerospace propulsion OE revenue whereas it had done so in 2016 (Euro 312 million in H1 2016). Excluding space activities in 2016, Propulsion OE rev
Slide 40: Quantities of major aerospace programs
Quantities of major aerospace programs H1 2016 H1 2017 % change Number of units delivered CFM56 engines 886 710 (20)% LEAP engines 11 147 x13 High thrust engines 367 256 (30)% Helicopter engines 349 314 (10)% M88 engines 9 12 33% A350 landing gear sets 25 43 72% 787 landing gear sets 69 66 (4)% A380
Slide 41: Definition
Definition Civil aftermarket (expressed in USD) This unaudited performance indicator comprises spares and MRO (Maintenance, Repair & Overhaul) revenue for all civil aircraft engines for Safran Aircraft Engines and its subsidiaries only and reflects the Group's performance in civil aircraft engines