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Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
0 / INVESTOR ROADSHOWS / MARCH 2015 / Q3 REVENUE 2011 / OCTOBER 21, 2011 /
/ March 2015 /
Tier 1 supplier in
Aerospace, Defence & Security
Investor roadshows
1 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
INVESTOR ROADSHOWS / MARCH 2015 /
2014 revenue by activities
Revenue €15,355M
Recurring op. income €2,089M (13.6% of revenue)
Net income - Group share €1,248M (€3.00/share)
Free Cash Flow €740M
Net debt position (Dec. 31) €1,503M (23% gearing)
29%
8%
53%
10%
Aircraft Equipment
Defence Aerospace Propulsion
Security
Tier 1 supplier in Aerospace - Defence - Security
FY 2014 (adjusted)
€15.4Bn
2 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Leading market positions
#1 ww Single aisle engines
Helicopter turbines
Landing gear
Aircraft wiring
Power transmission
#2 ww Space Propulsion
Engine nacelles
Wheels & brakes
#4 ww
Military engines
Aerospace Security Defence
#1 Europe Optronics
#3 ww Inertial navigation systems
#1 ww Biometric and ID solutions
A leader in aviation markets Detection
~80% of revenue coming from civil activities
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
3 / INVESTOR ROADSHOWS / MARCH 2015 /
/ 5 key themes / 2014 highlights & key events
Summary of FY 2014 results announcement
Positive trends in civil aftermarket
Investing in our future
Outlook: 2015 guidance
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
4 / INVESTOR ROADSHOWS / MARCH 2015 /
FY 2014 financial highlights
Growing adjusted revenue driven by strong performance in Aerospace and Security
FY 13* FY 14
14,363 15,355 +6.9%
Adjusted recurring operating income at 13.6% of revenue
FY 14
1,780 2,089
+17.4%
Higher adjusted net profit (group share) at €3.00 per share (€2.87 in FY 13 including €0.31
from the sale of Ingenico shares)
FY 13* FY 14
1,193 1,248 +4.6%
(€M) (€M)
(€M)
FY 13*
Proposed 2014 dividend up 7.1%
FY 13 FY 14
1.12 1.20
(€)
+7.1%
Moderate net debt level (23% gearing)
Dec. 31, 2013* Dec. 31, 2014
(1,220) (1,503)
(€M)
€(283)M
FCF was 35% of adjusted recurring operating income
FY 13* FY 14
699 740 +5.9%
(€M)
* 2013 has been restated to reflect the changes induced by IFRS11
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5 / INVESTOR ROADSHOWS / MARCH 2015 /
0
1 000
2 000
3 000
2010 2011 2012 2013 2014
Self-funded R&D CAPEX (tangible + intangible)
0
1 000
2 000
3 000
2010 2011 2012 2013 2014
Adjusted recurring operating income* (published)
0
250
500
750
1 000
2010 2011 2012 2013 2014
Free Cashflow
Selected financial highlights 2010-2014
*Unless otherwise noted, all data as published, under prevailing accounting standards
x2.5 x2.4
x2.4
Sound business model generating growing profits and cash
and sustaining strong investment
0
200
400
600
2010 2011 2012 2013 2014
Dividends
6 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Executing on key engine development programmes
LEAP: 70%+ market share for future narrow bodies
Close to 8,500 orders at end 2014
LEAP on track for certification as planned
LEAP-1A/-1C: successful first flights on flying test bed
LEAP-1B: ground testing and preparing for in-flight testing
Testing campaign progressing very well, as expected
Preparing for production readiness
World class supply chain
LEAP ramp-up supported by CFM56 success
Investments in facilities to bring new technology into production: new
plants in Rochester and Commercy to produce 3D woven carbon fibre
composite parts for the LEAP (JV’s with Albany)
LEAP engine takes to the skies
on October 6, 2014
Silvercrest
Complete propulsion system for Dassault 5X
Also selected for the Cessna Citation Longitude
Flight tests commenced in May 2014: engine
behaving well through whole flight envelope
7 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Helicopter turbines: delivering on new products roadmap
Arrius 2R, Arriusl 2B2+ and Arriel 2N: <1,000 shp
First flight of Arrius 2R on Bell 505 Jet Ranger X completed in November 2014;
certification planned for end 2015
Entry-into-service of Arrius 2B2+ on the EC135 T3
Certification of the Arriel 2N selected to power Airbus Helicopter new AS565
Arrano: 1,100 – 1,300 shp
Designed to power 4-6 tons twin engine helicopters and single engine helicopters close
to 3 tons
First rotation occurred in February 2014
The Arrano 1A will power the Airbus Helicopters X4 – single source
Makila 2B: 2,100 shp
First test runs
Certification planned for end 2015
Will offer increased performance to the newest Airbus Helicopters EC225e
Strengthening our world leading position
8 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Capturing opportunities in Aerospace
Strongly positive momentum in civil aerospace
New positions on major platforms
Boeing 777X:
Partner on GE9X with a workshare over 11%; responsible for composite fan blades, fan
disc, rear turbine frame, forward fan case (3D-RTM), LP compressor
Boeing also selected Safran (Aircelle) to supply nacelles exhaust systems on the 777X
Airbus A330neo:
Safran (Aircelle) selected by Airbus to supply the nacelle for the future A330neo powered
by Trent 7000 engine
Continuing commercial momentum including:
Outstanding commercial success for the LEAP: more than 2,700 orders received
in 2014
Sustained demand for the CFM56: more than 1,500 orders received in 2014; total
backlog of more than 4,500 engines
Multiple long term contracts for wheels and brakes systems including 737NG, 787,
A320neo, A320ceo
9 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Leveraging cutting edge technology in Defence
Leading portfolio of optronics equipment meeting customers’ requirements
French Navy awarded Safran to equip surface vessels with EOMS NG optronics sights
New orders for 1,200 night & day multifunction goggles
Contract to supply Matis SP thermal imagers for Simbad Remote Control surface-to-air launcher stations;
delivery will start in Q1 2015
Unique expertise in infrared seekers resulting in contract wins
MBDA awarded Safran the development and production of infrared seekers for the future anti-tank
Medium-Range Missile (MMP) for the French Army
Signature of a contract with MBDA for the development and production of the infrared seekers of the
Franco-British anti-surface guided weapon (FASGW)
Bolstering our offering and market position in the US
Successful integration in Avionics of the Integrated Cockpit Solutions business acquired from Eaton
Aerospace, strengthening our presence in the US
R&D effort to maintain technological differentiation
Strong order intake: €1.3B in 2014, up 35% vs 2013
10 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Scoring commercial successes in Security
MorphoTrust: maintained market leadership in the US
80% of US driver licenses issued by MorphoTrust; #1 position maintained
Prime contractor of Universal Enrolment Service (UES)
Expansion of the TSA Pre✓™ application program* to new airports. 800,000 travellers enrolled since the
program roll out 1 year ago
Identification: unique ability to deliver large-scale operations services
Successful public private partnership in Chile: over 4 million highly-secure passports and ID cards issued
since September 2013
Selected by Slovakia for its national e-ID card program and for its driver’s license cards
Exclusive, 10-year contract for Phase II of the Egyptian National ID project through local partner AOI.
Phase I had already been awarded to Safran in 2012. A new state-of-the-art ID card will be among the most
modern and secure in the world thanks to the introduction of a smartchip with several applications.
Equipped with the latest security features, these cards will allow a great number of e-government and other
applications.
Signature of a major multi-biometric e-Border contract with the United Arab Emirates Ministry of Interior.
Implementation of a fully integrated multi-biometric border control system in 5 major airports in UAE
Successful integration of Dictao
Broadening even further our range of highly secure solutions to both governments and private sector
companies (banks, insurance firms, manufacturers…)
Morpho-Dictao digital signature solutions approved by NATO, demonstrating their capability to protect
highly sensitive information from all types of cyber-attacks
* Under UES contract with TSA, MorphoTrust USA is the only authorized provider of TSA Pre✓™
11 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Investing in our future
2014 total R&D effort of €2bn
Self-financed R&D increased to €1.46bn (9.5% of sales) Intensification and acceleration of LEAP development and
testing
Start-up of GE9X development
Silvercrest spending plateau
Split of programs reflects upcoming opportunities c.50%: LEAP (3 applications) and Silvercrest (2 applications),
A350
c.25%: helicopter next gen turbines, GE9X, flight control,
infrared matrix, biometric ID engines…
c.25%: R&T in preparation of the future (mostly next gen
engines and electrical technologies)
Self-financed R&D to decrease in 2015 with a lower level
of capitalisation Decrease in LEAP
End of development spending on A350
Stable R&T
R&D spending peaked in 2014
In €M
Total self-funded R&D
Capitalized R&D
€693M
Total R&D effort
€1,289M
€1,809M
€1,464M
€644M
€1,990M
12 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Betting on technological differentiation
Safran invests approximately €400 million a year in
Research & Technology
2015: inauguration of Safran Tech, a R&T center
founded to intensify and pool transverse R&T efforts and
accelerate the development of innovative solutions
Improving employee skills
70% of employees take at least one training course
each year
2014: inauguration of Safran Campus, the new home of
Safran University, which offers training programs that
meet Safran's Human Resources challenges
Already, 11,500 employees have used the campus for
training or related activities
Investing in innovative solutions and human capital
13 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Airbus Safran Launchers
Safran and Airbus Group join forces in launcher activities
2-stage plan to boost sector competitiveness and provide customers with more
cost-efficient solutions
Stage 1 completed: January 2015 start of joint operations
During stage 2: contribution of launchers and space propulsion assets (excluding
satellite propulsion) to jointly owned company*
Safran would need to make an economic compensation of €800M* to Airbus
Group in order to obtain 50% of the JV, representing approximately 9x the
proforma supplemental EBITA in 2014 or approximately 6x to 7x proforma
supplemental estimated EBITA in 2016
Ariane 6
Modular launcher family to serve institutional and
commercial needs
Strong synergies with VEGA and the re-use of Ariane
5ME programme assets and main components
Airbus Safran Launchers is an enabler for streamlining
Ariane 6 development and launch service operations
A62 – 2 boosters A64 – 4 boosters
Modular launcher will be available in two
versions
*Subject to the finalisation of the principal conditions to the second phase (including notably
adjustments regarding working capital positions and the nature and timing of the compensation)
and customary approvals and formalities..
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14 / INVESTOR ROADSHOWS / MARCH 2015 /
/ 5 key themes / 2014 highlights & key events
Summary of FY 2014 results announcement
Positive trends in civil aftermarket
Investing in our future
Outlook: 2015 guidance
15 /
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INVESTOR ROADSHOWS / MARCH 2015 /
FY 2014 profit from operations
13.6% recurring operating income margin, up 1.2pt
(In €M) FY 2013
(restated) FY 2014
Revenue 14,363 15,355
Recurring operating income
% of revenue
1,780
12.4%
2,089
13.6%
Total one-off items (34) (107)
Capital gain (loss) on disposals 39 -
Impairment reversal (charge) (17) (45)
Other infrequent & material & non operational items (56) (62)
Profit from operations
% of revenue
1,746
12.2%
1,982
12.9%
Including:
€(52)M related to the
decision made by
Bombardier to pause the
Learjet 85 program;
€(17)M of acquisition &
integration charges;
Charges for operational
adaptation
16 /
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INVESTOR ROADSHOWS / MARCH 2015 /
FY 2014 income statement
* Based on 416,292,736 shares
** Based on 416,413,368 shares
FY 2014 net profit up 17.5%, excluding gain on Ingenico shares in 2013
(In €M) FY 2013
Restated FY 2014
Revenue 14,363 15,355
Other recurring operating income and expenses (12,635) (13,311)
Share in profit from joint ventures 52 45
Recurring operating income
% of revenue
1,780
12.4%
2,089
13.6%
Total one-off items (34) (107)
Profit from operations
% of revenue
1,746
12.2%
1,982
12.9%
Net financial income (expense) (138) (165)
Income tax expense (529) (522)
Share in profit from associates 15 18
Gain on disposal of Ingenico shares 131 -
Profit for the period attributable to non-controlling interests (32) (65)
Profit attributable to owners of the parent
EPS (in €)
1,193
2.87*
1,248
3.00**
Of which cost of debt of
€(42)M
Drop in effective tax rate to
28.7% mainly due to the
reduced tax base at
Techspace Aero after
deduction of revenue from
patents for 2013 and 2014
17 /
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INVESTOR ROADSHOWS / MARCH 2015 /
FY 2014 revenue
FY 2014 Currency
impact FY 2014
at constant
FY 2013
structure
Acquisitions &
activities
newly
consolidated,
disposals
FY 2013
restated
(IFRS11)
Organic
variation FY 2014
at constant
FY 2013 structure
and exchange
rates
+5.8%
organic
14,363
+6.9%
(in €M)
15,198 98 15,257
835 59 15,355
Organic growth: +5.8%
Driven by momentum in Propulsion (notably in services), OE revenue in Equipment and Identification in Security
Currency impact: +0.4%
Positive effect of improved $ hedged rate
Average $ spot rate in 2014 similar to 2013 thanks to the strengthening of the $ over H2 2014
External growth: +0.7%
Acquisitions: RRTM, GEPS, Eaton…
Disposal: Globe Motors
18 /
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INVESTOR ROADSHOWS / MARCH 2015 /
FY 2014 recurring operating income
FY 2014
Currency
impact
FY 2014
at constant
FY 2013
structure
Acquisitions &
activities newly
consolidated,
disposals
FY 2013
restated
(IFRS 11)
(In €M)
1,980 2,080
+11.2%
organic
Organic
variation FY 2014
at constant
FY 2013
structure and
exchange rates
2,089 200
100 9
12.4%
RoS
13.6%
RoS
+17.4%
1,780
Main profitability drivers
Propulsion: continued momentum in civil aftermarket, positive contribution from military engines and helicopter turbine support contracts, OE revenue for civil and military engines
Equipment: higher OE volumes in nacelles (A380). Higher contribution from carbon brakes and services (nacelles)
Security: good momentum in Identification activities. Positive impact of costs reduction
Positive impact from improved hedged rate
Changes in the scope of consolidation include:
Acquisitions: GEPS, RRTM, Eaton...
Disposal: Globe Motors
19 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Research & Development
Self-funded cash R&D effort at peak
level of 9.5% of sales
Ramp up of LEAP development and
testing; A350 and helicopters higher;
start-up of GE9X development;
Silvercrest spending plateau
Decrease of capitalized costs as
expected: €(49)M; Silvercrest fully
expensed since April 1, 2014
(In €M) FY 2013
restated FY 2014 Variation
Total R&D (1,809) (1,990) (181)
External funding 520 526 6
Total self-funded cash R&D (1,289) (1,464) (175)
as a % of revenue 9.0% 9.5% 0.5 pt
Tax credit 136 151 15
Total self-funded cash R&D after tax credit (1,153) (1,313) (160)
Gross capitalized R&D 693 644 (49)
Amortised R&D (76) (78) (2)
P&L R&D in recurring EBIT (536) (747) (211)
as a % of revenue 3.7% 4.9% 1.2 pt
20 /
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INVESTOR ROADSHOWS / MARCH 2015 /
FY 2014 results by activity
(In €M) FY 2014 Propulsion Equipment Defence Security Holding
& others
Revenue 15,355 8,153 4,446 1,221 1,530 5
Year-over-year growth in % 6.9% 7.4% 8.7% 2.0% 3.2% na
Recurring operating income 2,089 1,633 426 71 134 (175)
as a % of revenue 13.6% 20.0% 9.6% 5.8% 8.8% na
21 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Aerospace Propulsion
Growing revenue
Growth in civil and military OE volumes
Continued momentum in civil aftermarket (recent CFM56 and GE90 engines), higher contribution from maintenance of military engines
Positive contribution from helicopter turbine support contracts (notably thanks to additional contribution of RTM322 programme and recovery in EC225 support activities)
Strong growth in profitability mainly driven by services
Excellent contribution of civil aftermarket
Good performance of helicopter turbine support contracts and maintenance of military engines
Positive impact of civil and military OE
Positive currency effect
Increase in R&D charges as spending on Silvercrest is fully expensed since April 1st 2014
(In €M) FY 2013
(restated) FY 2014 Change
Organic
Change
Revenue 7,589 8,153 +7.4% +6.2%
Recurring operating income 1,358 1,633 +20.3%
% of revenue 17.9% 20.0% +2.1 pts
One-off items (16) (9)
Profit (loss) from operations 1,342 1,624
% of revenue 17.7% 19.9%
22 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Aircraft Equipment
OE driven revenue growth
Increase in OE deliveries on Boeing 787 (landing gear and wiring systems), in large and small nacelles (A380, SaM146), as well as increasing activity related to the A350
Good momentum in carbon brakes and higher contribution of services (nacelles)
Profitability increased slightly due to strong OE growth
Favourable volume impact (harnesses, nacelles)
High returns of carbon brakes as a result of a larger installed base and continued air traffic growth
Positive currency effect
Higher expensed R&D
(In €M) FY 2013
(restated) FY 2014 Change
Organic
Change
Revenue 4,091 4,446 +8.7% +7.3%
Recurring operating income 376 426 +13.3%
% of revenue 9.2% 9.6% +0.4pt
One-off items (3) (58)
Profit (loss) from operations 373 368
% of revenue 9.1% 8.3%
23 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Defence
Growth in Avionics offset softer revenue in Optronics as anticipated
Higher volumes in inertial navigation equipment and infrared seekers
Increase in services including maintenance and upgrade activity on FELIN equipment
Profitability slightly impacted by higher R&D expenses
Higher contribution of Avionics
Increase in expensed R&D (6.8% of revenue) due to strong pipeline of new products
Industrial reorganization to strengthen competitiveness
(In €M) FY 2013
(restated) FY 2014 Change
Organic
Change
Revenue 1,197 1,221 +2.0% (0.1)%
Recurring operating income 84 71 (15.5)%
% of revenue 7.0% 5.8% (1.2)pt
One-off items 7 3
Profit (loss) from operations 91 74
% of revenue 7.6% 6.0%
24 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Security
(In €M) FY 2013
(restated) FY 2014 Change
Organic
Change
Revenue 1,482 1,530 +3.2% +4.5%
Recurring operating income 120 134 +11.7%
% of revenue 8.1% 8.8% +0.7 pt
One-off items (3) (25)
Profit (loss) from operations 117 109
% of revenue 7.9% 7.1%
Identification: resumption of organic growth and increase in profitability
Good momentum at Morphotrust driven by the on-going nationwide implementation of the Federal Unified Enrolment
System (UES) and TSA Pre✓™ programme
Higher volumes of secured documents notably in Chile and Holland
Detection: revenue down due to the slippage into 2015 of CTX tomographic detection system deliveries;
satisfactory level of profitability
Business solutions: mixed performance as higher volumes were largely offset by pricing pressures and adverse
currency variations
Cost reductions across the businesses yielding profitability improvements
25 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Free Cash Flow
(in €M) FY 2013*
Restated FY 2014
Adjusted net profit 1,193 1,248
Depreciation, amortization and provisions 653 906
Others 100 314
Cash from operating activities before change in
WC 1,946 2,468
Change in WC 174 (111)
Capex (tangible assets) (489) (674)
Capex (intangible assets)** (932) (943)
Free cash flow 699 740
Increased Capex to prepare
the production transition
and face higher volumes,
including 2 new plants in
Rochester and Commercy
to produce 3D woven
composite parts for LEAP
Increase in WC to cope with
rising assembly rates in
aerospace
* 2013 is presented in a comparable format to 2014
** Of which €644M capitalised R&D in 2014 vs €693M capitalised in 2013
Of which amortization of
tangibles and intangibles
for €538M and provisions
(net) for €231M
+25%
Strong increase in cash
from operations despite
higher expensed R&D
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26 / INVESTOR ROADSHOWS / MARCH 2015 /
/ 5 key themes / 2014 highlights & key events
Summary of FY 2014 results announcement
Positive trends in civil aftermarket
Investing in our future
Outlook: 2015 guidance
27 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Continuing momentum in civil aftermarket
Civil aftermarket up 11.3%* in 2014, in line with guidance Growth driven by higher spares revenue from CFM56 and GE90 engines
despite a high comparison base
Momentum to continue in 2015
Growth drivers More, higher value shop visits on recent CFM56
Positive trend in GE90 aftermarket
Catch-up of deferred maintenance as airlines’ financial health improves
Positive global outlook for the airline industry in 2015 Passenger demand expected to be up 7% according to IATA
Lower oil price
Confirms CFM56 fleet potential for spares revenue to double from 2010 dip
before 2020e
*In USD
Civil aftermarket to grow by approximately 10%* in 2015
28 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Dedicated project decided
in 2011
Analysis concluded that
maintenance behaviour could differ
from one airline to another,
impacting new spare parts sales
Segment behaviour also varies
according to economic context and
air traffic
New model based on airlines
segmentation
Differentiate segments according to
maintenance behaviour
Simulate airlines’ reaction to
changing macro-economic
environment
Forecasting spare parts business opportunity:
the new “behaviour” model
Customer
Economics
Engine constraints
Air traffic forecast
Airlines maintenance behaviour
Maintenance contracts
Theoretical aging
29 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Forecasting spare parts
Outcome of the new model (CFM56 spare parts forecast)
Expected CFM56 spare parts
revenue profile
CFM56 spare parts revenue to increase
consistently and to peak by around 2025E
Revenue should double from 2010 dip before
2020E
1st generation CFM56 spare parts potential to fade
out within 5 years from now
The new model confirms 2025 horizon
“Behaviour” model adds increased visibility on the short term
2007 2010 2013 2016 2019 2022 2025 2028
2x 3x
2010 dip
x
30 /
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INVESTOR ROADSHOWS / MARCH 2015 /
0
100
200
300
400
500
600
700
800
0
5 000
10 000
15 000
20 000
25 000
30 000
CFM Gen 1 CFM Gen 2 Global spare parts revenue (in $ - 100 base in 2000)
CFM56: strong prospects until 2025 and beyond
CFM56 active installed fleet to peak around 2018E
at ~26,800 engines (~32,000 deliveries)
CFM56 spare parts revenue to peak by around 2025E
31 /
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INVESTOR ROADSHOWS / MARCH 2015 /
T&M: Time & Material
CFM is paid at the time of the actual shop visit on the basis
of an agreed-upon scope of material and labour
income, expenses and cash impact coincide
MSA: Material Service Agreement
CFM guarantees commercial conditions of parts supply
to airline/MRO providers
RPFH: Rate Per Flight Hour
CFM receives a fixed sum per flight hour based on estimated cost to
perform engine maintenance to meet performance and availability
guarantees
decoupling of revenue & cash-in with costs & cash-out
ESPO (Engine Service Per Overhaul): fraction of revenue booked
progressively and remainder booked at the time of SV
ESPH (Engine Service Per Hour): revenue booked progressively
Service agreements
A variety of aftermarket options tailored to needs
Service programmes aiming to
support airlines on a predictable
cost per engine flight hour
basis, to enable accurate
forecasting of operating costs,
reduced cost of ownership, and
improved asset utilisation
32 /
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INVESTOR ROADSHOWS / MARCH 2015 /
0
5 000
10 000
15 000
20 000
25 000
30 000
CFM56 GE90 LEAP
T&M
RPFH
Slow transition in business model
2014 to 2025: P&L will remain dominated by current model
Impact of RPFH will be gradual
Active installed fleet of engines
in 2020E (estimate)
Strong adoption of LEAP customers of
RPFH but LEAP fleet will represent ~10% of
combined CFM fleet (by 2020E)
CFM56 is mostly based on
Time & Material
Therefore, no material change expected
from RPFH accounting
by 2020E
~25,000
~3,000 ~2,700
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
33 / INVESTOR ROADSHOWS / MARCH 2015 /
/ 5 key themes / 2014 highlights & key events
Summary of FY 2014 results announcement
Positive trends in civil aftermarket
Investing in our future
Outlook: 2015 guidance
34 /
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INVESTOR ROADSHOWS / MARCH 2015 /
CFM56 lives longer, LEAP sells better
Increasing assembly rates for
narrowbodies
Faster LEAP ramp up
Outstanding commercial success:
Close to 8,500 engines in backlog vs
5,700 at 31 Dec. 2013
1,800 LEAP in 2020, 100 engines per
year more than 2013 CMD forecast
Higher CFM56 volumes over 2015-20
Strong backlog of more than 4,500
engines reflects sustaining demand
and healthy order intake rate YTD
Increasing market share on A320ceo
More than 400 additional CFM56
engines to be delivered in 2015-20
compared to 2013 CMD forecast 1
,80
0+
1,5
60
# deliveries
Capturing positive momentum of narrowbody segment
(e) (e) (e) (e) (e) (e)
35 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Increased 2014 R&D and capex targets
Programme
Development
Acceleration
+ Higher
Production Rates
CFM56 LEAP GE9X
Increased R&D, capex to meet accelerated targets and opportunities
fully justified by the programmes’ outstanding commercial success.
Cash consuming investments peaking in 2014.
Higher
Volumes
New
Opportunities
36 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Cash allocation in line with Group strategy
Research & Development Create a distinctive difference through technological innovation (long term)
Spending reflects winning some attractive new business (medium term)
Capital expenditure Modernize existing sites and strengthen the international scope
Acquisitions Accelerate or establish positions in critical areas at justified price
Dividend payments Grow cash returns to shareholders
40% payout of adjusted net income since 2007
Bu
sin
ess
Sh
are
ho
lders
37 /
Ce document et les informations qu’il contient sont la propriété de Safran. Ils ne doivent pas être copiés ni communiqués à un tiers sans l’autorisation préalable et écrite de Safran.
INVESTOR ROADSHOWS / MARCH 2015 /
Acquisitions: objectives & criteria
HLP Electrical Power Systems
RTM322 programme
Buy “installed base”
& “customer access” Buy “technology assets”
M&A financial criteria
Cover cost of capital within 3 years (RoCE)
A deal should be EPS accretive in year 1 ideally. If not, in year 2
ROI in the range of 10 to 12% Pe
rfo
rman
ce
B
ala
nce
sh
ee
t Net debt/EBITDA around 2.0x. 2.5x max at peak for a limited period of time
Interest cover ratio at 6x (= EBIT / Interest expense)
Colombia/Peru
Post-tax cost of capital of 8%
(aerospace & defence)
and 9.5% (security)
38 /
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INVESTOR ROADSHOWS / MARCH 2015 /
2014 dividend
A proposal for a dividend payment to
parent holders of €1.20 at next AGM on
April 23, 2015
€0.56 interim dividend already
paid in 2014 (€233M)
€0.64 to be paid in 2015
(€267M)
Ex-dividend date: April 27, 2015
Payment date: April 29, 2015
€1.20/share dividend payment subject to shareholders’ approval, up 7%
152 202 256 400 467 500 Total
dividend
distribution
(€M)
152
154
202
0.50
0.38
0.62
102
Final Dividend
distribution
(€M)
Dividend
per share
(€)
Interim
dividend
distribution
(€M)
0.96
129
271
200
267
1.12 1.20
267
233
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39 / INVESTOR ROADSHOWS / MARCH 2015 /
/ 5 key themes / 2014 highlights & key events
Summary of FY 2014 results announcement
Positive trends in civil aftermarket
Investing in our future
Outlook: 2015 guidance
40 /
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INVESTOR ROADSHOWS / MARCH 2015 /
2015 key assumptions
Healthy increase in aerospace OE deliveries
Airbus A350, A320, Boeing 737
Civil aftermarket growth by approximately 10%
Mainly driven by recent CFM56 and GE90 engines
Reduction of self-funded R&D of the order of € 100 M - € 150M with a lower level of
capitalisation
Less spending on LEAP, A350, helicopters, as they come closer to certification and
entry into service
Sustained level of tangible capex, around € 700 M, as requested by production
transitioning and ramp-up
Profitable growth for the security business
On-going Safran+ plan to further improve direct costs and reduce overhead
41 /
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INVESTOR ROADSHOWS / MARCH 2015 /
FY 2015 outlook
Adjusted revenue expected to increase by a percentage in high single digits at
an estimated average rate of USD 1.20 to the Euro
Adjusted recurring operating income expected to increase by a percentage in
low double digits at a hedge rate of USD 1.25 to the Euro.
The hedging policy isolates adjusted recurring operating income from current EUR/USD
variations except for the part generated in USD by activities located in the US, subject to
the translation effect when converted into Euro.
Free cash flow expected to represent 35% to 45% of the adjusted recurring
operating income subject to usual uncertainties on the timing of advance
payments
Safran’s 2015 outlook is applicable to the Group’s current structure and does not take into account any potential impact in 2015 of notably
the finalisation of the regrouping of its space launcher activities with those of Airbus Group in their joint venture, Airbus Safran Launchers.
Strong confidence for the long term CFM franchise is assured for the next decades (aftermarket revenue
and successful LEAP transition)
€/$ hedged book provides visibility on profits
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42 / INVESTOR ROADSHOWS / MARCH 2015 /
/ Annexe /
Additional information
43 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Net debt position
Cash flow from operations
equals 1.18x recurring EBIT
Modest increase in WC requirements
(rising assembly rates in Aerospace)
2013 final dividend (€0.64/share) and
2014 interim dividend (€0.56/share)
“Acquisitions & Others” includes:
Eaton: €(197)M
Dictao; extension to full ownership in Hydrep…
(in €M)
(1,220)
Dividends**
Net debt at Dec 31, 2013*
Cash flow from ops
Acquisitions & others
Net debt at Dec 31, 2014
Change in WC
R&D and
Capex
€740M Free Cash Flow
*Restated for the application of IFRS11
** Includes €(11)M of dividends to minority interests
(319)
(1,617)
(511)
(512)
(1,797)
(1,220) (1,503)
2,468
(111)
44 /
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INVESTOR ROADSHOWS / MARCH 2015 /
7.0 7.3 6.6
5.9
3.0
0.9 1.4
5.0
2014 2015 2016 2017 2018
Fx hedging: $21.7bn Hedge portfolio* (February 12, 2015)
Achieved
Target
1.26
1.25
1.25
1.25
1.25
1.25
1.25
1.18
1.21
($bn)
€/$ hedge
rate
*Approx. 45% of Safran US$ revenue are naturally hedged by US$ procurement
2015 & 2016 fully hedged; 2017 almost achieved
Higher yearly exposure: $7.3bn to $8.0bn
Higher expected level of net USD exposure for 2015-18 due to
strong growth of businesses with exposed USD revenue
2016: Increased coverage at $1.25
$6.6bn achieved at $1.25 (including knock out option
strategies) to rise to $7.5bn at $1.25 through accumulators as
long as €/$<1.38 up to end 2015
Knock out options barriers set at various levels above 1.38
2017: Increased and improved coverage at $1.25
$5.9bn achieved at $1.25 (including knock out option
strategies) to rise to $7.3bn at $1.25 through accumulators as
long as €/$<1.42 up to end 2015
Knock out options barriers set at various levels above 1.38
2018: Increased and improved coverage
$3.0bn achieved at $1.18 through knock out option strategies
to rise to a maximum of $8.0bn at $1.21 through accumulators
as long as €/$<1.28 up to end 2015
Knock out options barriers set at various levels between 1.32 and
1.45 with maturities ranging between 1 and 2 years.
NEW
NEW
Taking advantage of current €/$ spot rate to lower hedge rates in 2018-20
2015: Increased coverage at $1.25
NEW
45 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Estimated impact on recurring operating income
of targeted €/$ hedge rates
EBIT impact
vs previous
year (in €M)
€/$
hedge
rate
Favourable impact of new target hedged rate in 2018
Fx hedging: benefiting margins over 2015-2018
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46 / INVESTOR ROADSHOWS / MARCH 2015 /
FY 2013: R&D by activity
(In €M) FY 2013* Propulsion Equipment Defence Security
Total self-funded cash R&D (1,289) (789) (254) (117) (129)
as a % of revenue 9.0% 10.4% 6.2% 9.8% 8.7%
Tax credit 136 51 38 35 12
Total self-funded cash R&D after tax credit (1,153) (738) (216) (82) (117)
Gross capitalized R&D 693 516 129 31 17
Amortised R&D (76) (24) (37) (9) (6)
P&L R&D in recurring EBIT (536) (246) (124) (60) (106)
as a % of revenue 3.7% 3.2% 3.0% 5.0% 7.2%
* 2013 has been restated to reflect the changes induced by IFRS11
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47 / INVESTOR ROADSHOWS / MARCH 2015 /
FY 2014: R&D by activity
(In €M) FY 2014 Propulsion Equipment Defence Security
Total self-funded cash R&D (1,464) (894) (308) (133) (129)
as a % of revenue 9.5% 11.0% 6.9% 10.9% 8.4%
Tax credit 151 58 46 35 12
Total self-funded cash R&D after tax credit (1,313) (836) (262) (98) (117)
Gross capitalized R&D 644 475 122 26 21
Amortised R&D (78) (25) (37) (11) (5)
P&L R&D in recurring EBIT (747) (386) (177) (83) (101)
as a % of revenue 4.9% 4.7% 4.0% 6.8% 6.6%
48 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Aerospace OE* / Services revenue split
Revenue
Adjusted data (in Euro million)
FY 2013** FY 2014 % change
OE Services OE Services OE Services
Propulsion
% of revenue
3,923
51.7%
3,666
48.3%
4,073
50.0%
4,080
50.0%
3.8%
11.3%
Equipment
% of revenue
2,901
70.9%
1,190
29.1%
3,166
71.2%
1,280
28.8%
9.1%
7.6%
* All revenue except services
** 2013 has been restated to reflect the changes induced by IFRS11
49 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Quantities of major aerospace programmes
Number of units delivered
2013 2014 % change
CFM56 engines 1,502 1,560 4%
High thrust engines 619 690 11%
Helicopter engines 934 832 (11)%
M88 engines 20 26 30%
TP400 36 53 47%
787 landing gear sets 61 118 93%
A380 nacelles 108 112 4%
A330 thrust reversers 166 162 (2)%
A320 thrust reversers 513 506 (1)%
Small nacelles (biz & regional jets) 605 688 14%
50 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Definition
Civil aftermarket (expressed in USD)
This non-accounting indicator (non audited) comprises spares and MRO
(Maintenance, Repair & Overhaul) revenue for all civil aircraft engines for Snecma
and its subsidiaries and reflects the Group’s performance in civil aircraft engines
aftermarket compared to the market.
51 /
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INVESTOR ROADSHOWS / MARCH 2015 /
Disclaimer
The forecasts and forward-looking statements described in this document are based on
the data, assumptions and estimates considered as reasonable by the Group as at the
date of this document. These data, assumptions and estimates may evolve or change
as a result of uncertainties related in particular to the economic, financial, competitive,
tax or regulatory environment. The occurrence of one or more of the risks described in
the registration document (document de référence) may also have an impact on the
business, financial position, results and prospects of the Group and thus affect its ability
to achieve such forecasts and forward-looking statements. The Group therefore neither
makes any commitment, nor provides any assurance as to the achievement of the
forecasts and forward-looking statements described in this document
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