Safran Sa · EURONEXT:SAF

Safran Sa — FY2023 Earnings Presentation

30 slides from Safran Sa's earnings presentation, Feb 15, 2024

  1. Slide 1: FY 2023 results

    FY 2023 results February 15, 2024 Olivier ANDRIES Chief Executive Officer Pascal BANTEGNIE Chief Financial Officer

  2. Slide 2: Disclaimer & foreword

    Disclaimer & foreword FORWARD-LOOKING STATEMENTS This document contains forward-looking statements relating to Safran, which do not refer to historical facts but refer to expectations based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could

  3. Slide 3: Key highlights

    Key highlights  Favorable market trends  NB traffic fully recovered to 2019 level early 2023  WB traffic to catch-up in 2024  Strong market demand for new aircraft (India, Middle-East)  2023 results meeting or exceeding guidance  LEAP deliveries grew by 38% in a constrained supply-chain enviro

  4. Slide 4: FY 2023 financial performance

    FY 2023 financial performance Adjusted recurring operating Adjusted revenue(1) income(1) and margin(2) In €M In €M 23,199 +22% 3,166 19,035 +31% 2,408 13.6% 12.6% +100bps FY 2022 FY 2023 FY 2022 FY 2023 Free cash flow Dividend (3) In € In €M 2.20 2,945 2,666 +10% +63% 1.35 FY 2022 FY 2023 FY 2022 FY

  5. Slide 5: Latest business highlights

    Latest business highlights US$1.2bn agreements signed with Emirates LEAP engines orders and services agreements NacellelifeTM service contracts signed Military engines agreements 5 SAFRAN - FY 2023 Results / February 15, 2024 This document and the information therein are the property of Safran. They

  6. Slide 6: ESG – Climate strategy highlights

    ESG – Climate strategy highlights TECHNOLOGICAL ROADMAP  RISE: first wind tunnel tests of Open Fan technology at ONERA facilities  Successful flight test campaign with a LEAP-1A powered A321neo using 100% SAF  Successful ground test of the first hydrogen-combustion based turboprop engine for gene

  7. Slide 7: FY 2023 Results

    FY 2023 RESULTS

  8. Slide 8: Consolidated and adjusted income statements

    Consolidated and adjusted income statements Change in Mark-to-Market of instruments hedging future cash flows CURRENCY HEDGING BUSINESS COMBINATIONS Consolidated Adjusted FY 2023 reconciliation (In €M) data Re-measurement Deferred hedging Amortization of intangible PPA impacts – other data assets of

  9. Slide 9: Estimated net exposure and 2024 hedge rate

    FX Estimated net exposure ($bn) 13  2024 hedge rate set at $ 1.12 12 13 13 13 (1-cent improvement from 2023) 10.4  $54bn hedge book(1) as of Dec. 2023 ($50.5bn as of Oct. 2023) Spot rate €/$ 2022 2023 2023 2024e 2025e 2026e 2027e 2028e Average spot rate 1.05 1.08 Dec. 31 rate 1.07 1.11 €/$ hedge r

  10. Slide 10: FY 2023 income statement

    FY 2023 income statement (In €M) FY 2022 FY 2023 Revenue 19,035 23,199 Other recurring operating income and expenses (16,724) (20,155) Share in profit from joint ventures 97 122 Of which impairment charges for several programs and €(327)M of goodwill Recurring operating income 2,408 3,166 impairment

  11. Slide 11: FY 2023 revenue

    FY 2023 revenue (In €M)  Organic: +23.6%  Strong growth in services (+25%) in all 21.9% divisions benefiting from air traffic recovery  Strong growth in OE (+22%) driven by 1,012 23,524 23,199 narrowbody ramp-up despite supply chain 1,216 1,256 constraints 19,035 1,005 (312) (13)  Currency: (1.6

  12. Slide 12: FY 2023 recurring operating income

    FY 2023 recurring operating income (In €M) 31.5%  Recurring operating income up €758m 3,064 3,166 656 111 2,408  Operating margin up by 100bps (9) 13.6%  Main drivers 12.6% Organic  Growth in services, notably civil 27.2% aftermarket  OE ramp-up, with high spare engine ratio FY 2022 FY 2022 FY

  13. Slide 13: Aerospace Propulsion

    Aerospace Propulsion  Civil engines (In €M) 2022 2023 Change Organic Change  OE deliveries  1,570 LEAP (up 434 units vs. 2022, +38%), high level of spare engine ratio Revenue 9,506 11,876 24.9% 26.7%  High-thrust engines: 190 units (up 9 units vs. 2022)  Civil aftermarket revenue growth (up 32.

  14. Slide 14: Equipment & Defense

    Equipment & Defense  Equipment (In €M) 2022 2023 Change Organic Change  Strong growth in services in all activities  OE volumes up Revenue 7,535 8,835 17.3% 17.3%  Landing gears (A320neo, 787)  Electrical systems (787, A320neo, 737MAX) Recurring operating income 874 992 118 OE: 13.4%  Avionics

  15. Slide 15: Aircraft Interiors

    Aircraft Interiors  Strong organic revenue growth, still 23% below (In €M) 2022 2023 Change Organic Change 2019 revenue Revenue 1,978 2,477 25.2% 32.8%  Cabin  Strong growth in OE led by Custom Cabin and Floor to Floor activities Recurring operating income (140) (116) 24 OE: 24.8%  Strong growth

  16. Slide 16: FY 2023 Free Cash Flow

    FY 2023 Free Cash Flow (In €M) 2022 2023 Recurring operating income 2,408 3,166 One-off items (450) (511) Stable amortization at €1,041M, Amortization, provisions and depreciation (excl. financial) 1,540 1,491 lower level of depreciation at €498M and lower level of provisions at €(48)M EBITDA 3,498

  17. Slide 17: FY 2023 net cash evolution

    FY 2023 net cash evolution (In €M) Net cash Net cash at Dec 31, 2022 €2,945M Free Cash Flow at Dec 31, 2023 758 S&P: A-, stable outlook 3,512 Change in WC (1,325) R&D and Capex (583) Dividends(1) (1,535) 374 14 (177) Shares M&A (290) repurchase Others (2) Net Cash Dec. 2022 Cash flow Cash flow from

  18. Slide 18: Shareholder returns

    Shareholder returns  Dividend up 63%  Share repurchase programs  Safran will propose to its shareholders’ vote a dividend per  c. €1.5bn of shares repurchased in 2023 (11.2m shares) share of €2.20 for fiscal year 2023, paid in 2024(1)  up to 450M€ worth of shares to be repurchased in Q1 2024(3)

  19. Slide 19: FY 2024 Outlook

    FY 2024 OUTLOOK

  20. Slide 20: FY 2024 outlook

    FY 2024 outlook SAFRAN EXPECTS TO ACHIEVE FOR FY 2024(1) (€/$ spot rate of 1.10 and hedge rate of 1.12)  Revenue around €27.4bn  Recurring operating income close to €4.0bn  Free Cash Flow around €3.0bn subject to payment schedule of some advance payments Safran’s main assumptions Watch item  LEA

  21. Slide 21: FY 2024 key priorities

    FY 2024 key priorities  Manage ramp-up in OE deliveries  Support aftermarket growth  Execute Aircraft Interiors turnaround  Accelerate pace of investment for decarbonization  Focus on earnings and cash growth trajectory towards 2025 21 SAFRAN - FY 2023 Results / February 15, 2024 This Thisdocum

  22. Slide 22: Appendix

    APPENDIX a a S SAFRAN

  23. Slide 23: Number of products delivered on major aerospace programs

    Number of products delivered on major aerospace programs Number of units delivered 2022 2023 Units % Number of units delivered 2022 2023 Units % LEAP engines 1,136 1,570 434 38% 787 landing gear sets 21 30 9 43% CFM56 engines 60 52 (8) (13)% A350 landing gear sets 43 46 3 7% High thrust engines 181

  24. Slide 24: OE / Services revenue split

    OE / Services revenue split 2022 2023 REVENUE Adjusted data (in Euro million) OE Services OE Services Aerospace Propulsion 3,515 5,991 4,565 7,311 % of revenue 37.0% 63.0% 38.4% 61.6% Equipment & Defense 4,710 2,825 5,368 3,467 % of revenue 62.5% 37.5% 60.8% 39.2% Aircraft Interiors 1,389(1) 589 1,5

  25. Slide 25: FY 2023: Research & Development

    FY 2023: Research & Development (In €M) 2022 2023 Change Total R&D (1,540) (1,818) (278)  R&D expenses +19% at €1,216M in 2023 R&D sold to customers 521 602 81  R&T self-funded expenses at €598M (€471M in 2022) up 27%, focused on decarbonization (RISE program) R&D expenses (1,019) (1,216) (197) 

  26. Slide 26: FY 2023: Research & Development by activity

    FY 2023: Research & Development by activity Aerospace Equipment & Aircraft (In €M) 2023 Propulsion Defense Interiors R&D expenses (1,216) (570) (484) (162) as a % of revenue 5.2% 4.8% 5.5% 6.5% Tax credit 159 67 87 5 R&D expenses after tax credit (1,057) (503) (397) (157) Gross capitalized R&D 319 9

  27. Slide 27: Balance sheet as of December 31, 2023

    Balance sheet as of December 31, 2023 (In €M) Dec 31, 2022 Dec 31, 2023 Goodwill 4,994 4,706 Tangible & Intangible assets and right of use 12,509 12,533 Investments in joint ventures and associates 1,974 1,928 Other non current assets 2,354 1,926 Operating Working Capital (2,453) (3,450) Net cash (d

  28. Slide 28: Liquidity as of December 31, 2023

    Liquidity as of December 31, 2023  Cash and cash equivalent of €6,676 million December 31, 2023 (stable compared with December 31, 2022) Undrawn revolving credit facility  Net cash positive €2,000M  On February 9, 2024, Safran reimbursed with cash in hand the $505 million matured last tranche of

  29. Slide 29: Definitions

    Definitions  Civil aftermarket (expressed in $)  This non-accounting indicator (non-audited) comprises spares and MRO (Maintenance, Repair & Overhaul) revenue for all civil aircraft engines for Safran Aircraft Engines and its subsidiaries and reflects the Group’s performance in civil aircraft engi

  30. Slide 30: SAFRAN - FY 2023 Results / February 15, 2024

    30 SAFRAN - FY 2023 Results / February 15, 2024 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

Safran — FY2023 Earnings Presentation on 6ix