Slide 1: 2023 Full-Year results
2023 Full-Year results 5 March 2024 www.thalesgroup.com
Slide 2: Full-Year 2023 highlights
Full-Year 2023 highlights Ongoing strong commercial momentum across portfolio, driving new record backlog Sales growth above top of guidance range EBIT margin up 60 basis points Another year of strong free operating cash-flow generation Accelerated capital deployment: Active M&A strategy roll-out
Slide 3: 2023 key figures
2023 key figures Order intake and book-to-bill Sales EBIT and EBIT margin(b) €m -2% €m €m and % +10.2% +4.9% +0.2%(a) +7.9%(a) +10.9%(a) 1.34 1.26 11.0% 11.6% Adjusted net income(b) Free operating cash-flow(b) Dividend €m €m € +13.6% -19.9% (c) +16% (a) Organic: at constant scope and exchange rates
Slide 4: Continuous progress in ESG performance
Continuous progress in ESG performance Targets Targets -52% 75% of 49% 35% reduction of 0% management 87% 2023 2023 operational CO2 committees with emissions(a) 2018 2023 2018 2023 at least 3 women by 2023 2022 result: -40% by 2023 2022 result: 76% Strategy Diversity 100% of new 0% 100% for a low- d
Slide 5: 2023 order intake
2023 order intake Order intake by contract unit value Another year of strong order intake, driven by Organic growth: +0.2% robust commercial activity in Q4 €m • 13 large(a) orders booked in Q4 2023 • 25 large(a) orders booked in 2023 (vs. 29 in 2022) 2023 book-to-bill of 1.26, and 1.31 excluding Uni
Slide 6: 2023 sales growth
2023 sales growth Significant currency impact Drivers of sales change • Q4: €-73m, -1.4% of sales €m Reported growth: +4.9% • FY2023: €-256m, -1.5% of sales 18,428 Strong organic sales growth, above top 17,569 -256 -223 of guidance range, at +7.9% Currency Scope Organic • Driven by civil aero, incre
Slide 7: 2022 to 2023 EBIT bridge
2022 to 2023 EBIT bridge Gross margin Marketing Equity R&D Scope, & sales G&A Restructuring affiliates currency and 2,132 -82 -41 1,935 pension -26 +2 -19 +25 +338 Naval Group: -28 Others: +9 Scope: +10 Currency: -21 Pension: +36 11.6% 11.0% 2022 2023 EBIT % margin EBIT 2023 Full-Year results - 7
Slide 8: Aerospace: 2023 key figures
Aerospace: 2023 key figures 2023 2022 Change €m total organic Order intake 5,592 5,892 -5% -5% Sales 5,211 4,705 +10.7% +11.7% EBIT 371 235 +58.2% +60.9% in % of sales 7.1% 5.0% Order intake slightly down vs. FY22 despite strong performance of the Avionics businesses • Aeronautics up at double digit
Slide 9: Defence & Security: 2023 key figures
Defence & Security: 2023 key figures 2023 2022 Change €m total organic Order intake 14,139 13,959 +1% +2% Sales 9,796 9,156 +7.0% +7.5% EBIT 1,251 1,179 +6.1% +7.3% in % of sales 12.8% 12.9% Fifth year record-high order intake with a backlog now at 3.6 years of revenues • 17 large(a) orders booked i
Slide 10: Digital Identity & Security (DIS): 2023 key figures
Digital Identity & Security (DIS): 2023 key figures 2023 2022 Change €m total organic Sales 3,347 3,618 -7.5% +4.1% EBIT 508 494 +2.7% +1.5% in % of sales 15.2% 13.7% Order intake structurally aligned with sales for most businesses Organic sales up mid-single digit, aligned with guidance, with contr
Slide 11: Summary adjusted P&L: from EBIT to adjusted net income
Summary adjusted P&L: from EBIT to adjusted net income 2023 2022 €m EBIT 2,132 1,935 Cost of net financial debt and other financial results (36) (84) Finance costs on pensions and other employee benefits (76) (35) Income tax (370) (331) Effective tax rate 20.1% 20.6% Minorities 12 (18) Adjusted net
Slide 12: Cash conversion: from EBIT to Free Operating Cash-Flow
Cash conversion: from EBIT to Free Operating Cash-Flow 2023, €m 115% Financial Income interest tax Equity Other Transport Change contribution affiliates in WCR items +11 Capex -195 +75 +57 -56 -171 +173 Restructuring, lease Depreciation & depreciations, Amortization: +450 pension… Net operating inve
Slide 13: 2023 adjusted net income cash conversion above target
2023 adjusted net income cash conversion above target 2023: fourth year of significant free cash Adjusted net income conversion into Free operating cash flow flow outperformance 162% • Strong order intake, especially in defence 185% markets 115% 2,515 2,527 • Favourable phasing from defence contract
Slide 14: Movement in net debt over 2023
Movement in net debt over 2023 €m Deficit Free payment operating on UK cash-flow pension Acquisitions & disposals Net debt Net debt at 31 Dec 22 -1,078 at 31 Dec 23 -35 +2,026 Dividends paid Share New buy-back leases -3,464 (IFRS16) Other -634 -461 -166 -187 2023 Full-Year results - 14
Slide 15: Adjusted EPS and dividend
Adjusted EPS and dividend Adjusted EPS and dividend per share € Adjusted EPS 28% above 2019 • Up 24% per year since 2020 Proposed 2023 dividend: €3.40 per share(a) (a) • Pay-out ratio confirmed at 40% • Up 25% per year since 2020 9%(b) 40% 40% 40% 40% Adjusted EPS Dividend xx% Pay-out ratio (a) Subj
Slide 16: Strategy
2023 Full-Year results Strategy 2023 Full-Year results - 16
Slide 17: Key 2024 priorities
Key 2024 priorities 1 Continued ramp up to capture market growth 2 Sustained excellence in R&D, a key differentiator 3 Recognition of our sustainability performance 4 Demonstrated optimized capital allocation strategy 2023 Full-Year results - 17
Slide 18: Confirmed ramp up of recruitment capabilities
1 Confirmed ramp up of recruitment capabilities Pursuing dynamic recruitment in 2023 Global recruitment volumes Ramping-up engineering centers in Romania and India Number of Continued increase in production outputs employees 11 500 10 900 Turnover back to pre-Covid levels Prior to 9 400 Gemalto 8 70
Slide 19: Ramp-up in capex and supply chain management to address strong demand
Ramp-up in capex and supply chain management to address 1 strong demand Continued increase in capex Capex ramp-up plan Ramping-up production output to meet growth ~720 Several sites extension and footprint optimization €m 622 IS/IT and other Supply chain disruption mitigated 496 525 Improvement in e
Slide 20: Sustained excellence in R&D, a key differentiator
2 Sustained excellence in R&D, a key differentiator Sustaining excellence in R&D Self-funded R&D Among Clarivate’s “top 100 global innovators” 2024, for the 11th year Portfolio of more than 20,500 patents €m and % of sales 1 108 Leveraging multiple funding sources €73m collaborative R&D grants throu
Slide 21: Unveiling the extent of Thales' capabilities in AI for critical usages
2 Unveiling the extent of Thales’ capabilities in AI for critical usages AI, already a reality for Thales and a business enabler To accelerate customers’ operations POD Talios: 100 times faster analysis than current manual search TopSky Sequencer in civil aeronautics increasing by 20% airport la
Slide 22: Take our sustainability performance to the next level
Take our sustainability performance to the next level: 3 high value contributions in 2023 through portfolio of solutions Greener: ~20% Design solutions to reduce the environmental impact of our customers Safer: ~60% Keep citizens safe in both physical and digital worlds IRIDE radar and optical PureF
Slide 23: Performance also recognized externally: ESG ratings improvement
3 Performance also recognized externally: ESG ratings improvement 2030 Targets “A” Rating LEADING Joined CAC VALIDATION LEADING #1of CAC40 1% SBTi 1.5 1.5% New ESG Roadmap to be communicated in H2 2024 Note: RSCE stands for 'Corporate Scientific Responsibility.' (Responsabilité scientifique des entr
Slide 24: Demonstrated optimized capital allocation strategy
4 Demonstrated optimized capital allocation strategy Successful deployment of Positioning Thales as one of the top 5 capital allocation levers in 2022 - 23 global cybersecurity leaders Major acquisitions closed in 2022 and 2023 Active M&A strategy: ~ €4bn(a) Imperva: leading global data and applicat
Slide 25: Further capital allocation levers in 2024
4 Further capital allocation levers in 2024 2024 Levers Consistent M&A strategy going forward NO CHANGE Selective acquisitions Cash-out for AeroComms acquisition: Focus on targeted M&A opportunities ~-€1.0bn Cash-in from Transport disposal in H1 2024: Easy to integrate in one of our existing ~+€1.5b
Slide 26: Outlook
2023 Full-Year results Outlook 2023 Full-Year results - 26
Slide 27: Avionics: top line growth to normalise in 2024
Avionics: top line growth to normalise in 2024 Key growth drivers for 2024 Global passenger traffic evolution Billion RPKs. Source: IATA Air passenger traffic vs same period in 2019 Yearly Evolution Expected to remain dynamic in 2024 2021 2022 2023 2024e 2021 2022 2023 2024e Fuelling aftermarket
Slide 28: Space: two main business lines with leadership positioning
Space: two main business lines with leadership positioning Observation, Exploration, Navigation (OEN) - Institutional & defence Telecom - Commercial customers JV structure customers 67% Thales/ 33% Leonardo Leading positioning Best-in-class product range Optical and radar unique offer: All In One GE
Slide 29: Telecom action plan to restore profitability
Telecom action plan to restore profitability Conjunctural headwinds How to capture new market opportunities No inflation pass-through mechanism Adapt to the GEO market new size Supply chain difficulties notably for propulsion Maintain ability to develop constellations => Leading to delays and higher
Slide 30: Defence & Security: ramping up to deliver on new record backlog
Defence & Security: ramping up to deliver on new record backlog and address sustained demand growth Confirmation of a robust demand context Defence & Security end-year backlog Geopolitical tensions driving sustained €bn and 35.2 years of sales budget growth in main Thales geographies 31.0 23.2 26.1
Slide 31: DIS: global leader on cybersecurity and digital identity markets
DIS: global leader on cybersecurity and digital identity markets 2024 context and priorities Key 2023 highlights fuelling 2024 pipeline Cybersecurity x2 eSIM activations Integration of Imperva and Tesserent 100 Million eSIM for connected cars Transfer of civil activities from Defence & x2 eco-friend
Slide 32: 2024 financial objectives
2024 financial objectives Order intake Book-to-bill above 1 +4% to +6% organic growth(a) Sales corresponding to €19.7bn to €20.1bn(b) EBIT margin(c) 11.7% to 12.0%(a) Note: Those figures assume the consolidation of Cobham Aerospace Communications as of April 2024. (a) Assuming no new major disruptio
Slide 33: Appendix
Appendix 2023 Full-Year results - 33
Slide 34: Upcoming events
Upcoming events Q1 2024 sales 30th April 2024 (before market) Annual General Meeting 15th May 2024 Dividend payment(a) 23rd May 2024 H1 2024 results 23rd July 2024 (before market) Q3 and 9m 2024 sales 23rd October 2024 (before market) Capital Markets Day in Paris 14th November 2024 (a) Subject to ap
Slide 35: 2023 order intake by destination
2023 order intake by destination FY FY Change In € millions 2023 2022 Total Organic ROW France 6,132 6,504 -6% -5% ME United Kingdom 3,095 1,100 +181% +188% France Asia Rest of Europe 6,248 4,979 +25% +28% Europe 15,476 12,583 +23% +25% AU/NZ North America 2,368 2,794 -15% -13% Australia / NZ 839 92
Slide 36: 2023 sales by destination
2023 sales by destination FY FY Change In € millions 2023 2022 Total Organic ROW France 5,437 4,827 +12.6% +13.4% ME United Kingdom 1,208 1,019 +18.5% +21.1% Rest of Europe 4,578 4,348 +5.3% +8.3% France Asia Europe 11,223 10,194 +10.1% +12.0% North America 2,581 2,415 +6.9% +10.3% AU/NZ Australia /
Slide 37: Summary adjusted P&L: from sales to EBIT
Summary adjusted P&L: from sales to EBIT 2023 2022 Change €m % of sales €m % of sales total organic Sales 18,428 17,569 +4.9% +7.9% Gross margin 5,156 28.0% 4,837 27.5% +6.6% +8.0% Indirect costs (3,113) -16.9% (3,013) -17.1% +3.3% +5.1% o/w R&D expenses (1,108) -6.0% (1,064) -6.1% +4.1% +8.2% o/w M
Slide 38: 2023 adjusted net result
2023 adjusted net result Consolidated Actuarial Adjusted P&L Change in P&L Amortization Disposal of gains/losses fair value of €m of acquired assets and derivative FX on other assets (PPA) others long term 2023 instruments 2023 benefits Sales 18,428 — — — — 18,428 Cost of sales -13,662 390 — — — -13
Slide 39: 2022 adjusted net result
2022 adjusted net result Consolidated Adjusted P&L Change in Actuarial P&L Amortization Disposal of fair value of gains/losses €m of acquired assets and derivative FX on other long assets (PPA) others 2022 instruments term benefits 2022 Sales 17,569 — — — — 17,569 Cost of sales -13,113 381 — — — -12
Slide 40: EBIT by operating segment
EBIT by operating segment Change 2023 2022 €m / % of sales total organic Aerospace 371 7.1% 235 5.0% +58.2% +60.9% Defence & Security 1,251 12.8% 1,179 12.9% +6.1% +7.3% Digital Identity & Security 508 15.2% 494 13.7% +2.7% +1.5% EBIT - operating segments 2,130 11.6% 1,908 10.9% +11.6% +12.4% Other
Slide 41: Organic sales growth per quarter
Organic sales growth per quarter 2020 2021 2018 2022 2019 2023 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Aerospace Defence & Security Digital Identity & Security Total 2023 Full-Year results - 41
Slide 42: Q4 2023 order intake by operating segment
Q4 2023 order intake by operating segment Q4 Q4 Change €m 2023 2022 Total Organic Aerospace 2,200 2,247 -2% 0% Defence & Security 7,598 4,782 +59% +60% Digital Identity & Security 939 1,032 -9% -3% Other 25 41 Total 10,761 8,102 +33% +35% 2023 Full-Year results - 42
Slide 43: Q4 2023 sales by operating segment
Q4 2023 sales by operating segment Q4 Q4 Change €m 2023 2022 Total Organic Aerospace 1,583 1,435 +10.3% +13.7% Defence & Security 3,025 2,769 +9.3% +10.4% Digital Identity & Security 942 1,034 -8.9% -2.7% Other 24 32 Total 5,574 5,271 +5.8% +8.8% 2023 Full-Year results - 43
Slide 44: 2023 main scope effects on sales
2023 main scope effects on sales €m Q1 Q2 Q3 Q4 2023 Acquisitions Aerospace 18 17 -11 24 Ruag 18 17 -11 24 Defence & Security 43 38 21 101 Advanced Acoustics Concepts 22 18 40 S21 Sec and Excellium 21 19 21 61 Digital Identity & Security 3 4 3 70 80 One Welcome 3 4 4 10 Tesserent 17 17 Imperva 53 53
Slide 45: Transport: 2023 key figures
Transport: 2023 key figures 2023 2022 Change €m total organic Order intake 2,313 2,191 +6% +7% Sales 1,822 1,772 +2.8% +4.4% EBIT 112 132 -15.5% -14.4% in % of sales 6.1% 7.4% -1.3 pts -1.3 pts Another year of solid order intake, up organically by 7%, enhancing the book-to-bill ratio (above 1.2) Sal
Slide 46: Definition of non-GAAP measures and other remarks
Definition of non-GAAP measures and other remarks Rounding of amounts in euros In the context of this presentation, the amounts expressed in millions of euros are rounded to the nearest million. As a result, the sums of the rounded amounts may differ very slightly from the reported totals. All ratio