q3 2010 revenue en - safran-group.com€¦ · q3 revenue 2010 - october 22, 2010 7 all revenue...

October 22, 2010

Third-quarter 2010 revenue

Jean-Paul HERTEMANCEO

Ross McINNESCFO

Safran

Q3 revenue 2010 - October 22, 2010

2

Q3 2010 business highlightsKey strategic moves & key wins

Aerospace Propulsion

Aircraft Equipment Security

DefenceJV with Elbit Systems for tactical unmanned aircraft systems

Acquisition of Harvard Custom Manufacturing (Electrical wiring systems)

Decision to merge Messier-Dowty, Messier-Bugattiand Messier Services

Agreement to acquire SNPE Matériaux Energétiques (SME)

Morpho and Mahindra Satyamselected to implement and deliver the Aadhaar program by UIDAI (Unique Identification Authority of India)

Entered into definitive agreement for the acquisition of L-1 Identity Solutions


3

Q3 2010 financial highlightsSolid revenue growth

Q3 2009 Q3 2010

2,384

2,593

(€M)

+8.8%

2-digit revenue contribution from:Equipment (wiring & landing systems - B787)

Defence (notably Optronics)

Security (across all businesses)

Mild decrease in Aerospace PropulsionInflexion point in CFM spares?(CFM56 spares down yoy, but up 16% sequentially)

Aftermarket up, except for CFM56

Lower OE deliveries (helicopters, CFM56)

Tailwind from Fx ($, CAD, AUS$)


4

(8)%

(19)%

(26)%

(2)%

294

163

17

89

321

201

23

91

Number of deliveries

1. CFM56 engines

2. Helicopter engines

3. A380 nacelles

4. Small nacelles (biz & regional jets)

Aerospace OE

20,570

55%

Q3 2010

5%

3pts

19,509

52%

Total installed base

Share of 2nd gen. engines

ChangeQ3 2009CFM56 engines

6.4%1,1121,045 **OE revenue* Prop. & Equipment (in €M)

Increased share of 2nd generation CFM engines in fleet

future flow of high value services

1. Lower CFM56 deliveries: one-off impact from flood in factory (Poland)

2. Impact of decline in small helicopters

3. Impact of Airbus A380 deliveries delay

4. Stabilization of the business & regional jets segments

* Including revenue from R&D contracts and miscellaneous** Restated to include leases in Services

OE growth mainly driven by Fx spot rate


5

Services revenue driven by engines aftermarket despite CFM spares sales softness

Continued good performance in services to military customers (aircraft and helicopters)

Growth in high thrust widebody engine spares (e.g. GE90 on B777)

Mild transition in CFM56 spares (-16% in $ vs. Q3 2009, +16% vs. Q2 2010)

* Including spares and maintenance & repair activities** Restated to include leases

Aerospace services

0.7%913907Total services revenue

-(4.2)pts

20229.0%

20233.2%

Aircraft EquipmentServices share of total revenue

71153.5%

Q32010

0.9%1.0pt

70552.5%

Aerospace PropulsionServices share of total revenue

ChangeQ3 2009 **

Services* revenue(in €M)

Resilient total services revenue


6

Safran

Q3 2010 Financials


7

All revenue figures in this presentation represent Adjusted revenue (see annex for bridge with consolidated revenue)

To reflect the Group’s actual economic performance and enable it to be monitored and benchmarked against competitors, Safranprepares an adjusted income statement alongside its consolidated financial statements.

Particularly, Safran recognizes, all changes in the fair value of its foreign currency derivatives in “financial income (loss)”, in accordance with the provisions of IAS 39 applicable to transactions not qualifying for hedge accounting.

Accordingly, Safran’s consolidated income statement is adjusted for the impact in financial income (loss) of the mark-to-market of foreign currency derivatives, in order to better reflect the economic substance of the Group's overall foreign currency risk hedging strategy:

§ Revenue net of purchases denominated in foreign currencies is measured using the effective hedging rate, i.e., including the costs of the hedging strategy;

§ The recognition of the mark-to market of unsettled hedging instruments at the closing date is neutralized.

ForewordDefinitions


8

Fx volatility

Increased Fx volatility during Q3 2010

Translation effect: foreign currencies translated into €⇒ Impact on Revenue and Return on Sales

Transaction effect: mismatch between $ sales and € costs is hedged⇒ Impact on Profits

Mark-to-market effect⇒ Impact on consolidated “statutory” accounts

Hedging management - continuing policy

Capturing better rates to optimize portfolio

Rolling 3-year hedging policy

Diverse impacts on P&L

Hedge rate

$ 1.44$ 1.43Q3 2010Q3 2009

Average spot rate

$1.29$1.43Q3 2010Q3 2009

Spot rate

$ 1.36$ 1.46Sept. 30, 2010Sept. 30, 2009


9

Q3 2010 revenue

8.8%

na

35.4%

29.6%

14.5%

(1.1)%

Change

reported

2,593

9

279

280

696

1,329

Q3 2010

na10Others

4.7%206Security

0.5%2,384Total revenue

18.0%216Defence

7.6%608Aircraft equipment

(6.0)%1,344Aerospace propulsion

Change

organicQ3 2009Adjusted data

(in Euro million)

Positive impacts

Aftermarket for military, helicopters and high-thrust engines

B787 wiring & landing systems

2-digit growth in Optronics

Contribution of Morpho Detection

Negative impacts

Weak CFM56 spares vs. Q3 ’09, higher vs. Q2 ’10

Timing of CFM56 OE deliveries

Growing by 8.8%


10

Q3 2010 revenue

Q3 2010Currency impact

(spot rate)

Q3 2010at Q3 2009 perimeter

Acquisitions & activities newly consolidated

Q3 2009

(In €M)

2,384 2,396

2,508

0.5%organic

Organic variation

Q3 2010 at constant

Q3 2009 perimeter and exchange rate

2,593

12

112

85

0.5% organic growth

+8.8%


11

9m 2010 revenue

3.4%

na

18.4%

15.3%

2.4%

(0.5)%

Change

reported

7,790

32

758

838

2,070

4,092

9m 2010

na32Others

(10.3)%640Security

(1.4)%7,533Total revenue

11.7%727Defence

(0.9)%2,021Aircraft equipment

(2.6)%4,113Aerospace propulsion

Change

organic9m 2009Adjusted data

(in Euro million)

Trends in line with FY 2010 expectations for stable revenue


12

3-year hedging policy

Hedge portfolio, Oct 15, 2010

1.34

1.34

-

-

1.30

1.31

1.39

-

1.44

-

1.42

-

Achieved

Target

In US$ bn 2010: $1.44 now achieved

2010 & 2011 net exposure revised downwards to reflect improved $ cost base

(*) 2012: $3.1bn achieved at $1.34 to rise to $4.5bn at $1.34as long as €/$<1.65 for the balance of 2010 and most of 2011

€/$ hedge rate

Safran continued to optimize its hedging portfolio

Total: $12.6bn

3.63.1

4.3 4.4 4.65.05.05.0

0

1

2

3

4

5

2009 2010 2011 2012 2013 2014*


13

Safran

Conclusion


14

As of Dec. 31, 2009

French State30.2%

Areva7.4%

Public38.1%

Treasury shares4.2% Employees

20.1%

Equity shareholdingFree float increased by 8.5 points over 9 months

As of Oct. 12, 2010

French State30.2%

Areva2.0%

Public46.6%

Treasuryshares4.2%

Employees17.0%

Following a 5.4% stake disposal by Areva


15

2010 outlook is confirmed

Revenue expected to be similar to 2009

Recurring operating margin expected to trend towards the 8% range(at a targeted hedge rate of USD1.44 to the Euro)

Free cash flow expected to represent at least half of the recurring operating income(assuming that French MoD payment delays are significantly resorbed)

Underlying assumptionsA 5%+ increase in global air traffic

A stabilization in original equipment commercial aviation business

A moderate growth in sales in aerospace services, back ended (H2 2010)

Strong and profitable growth for the Security business

On-going Safran+ plan to enhance profitability and reduce overheads


16

Safran

Questions & Answers


17

Q3 & 9m 2010 consolidated and adjusted revenue

PPA impacts -other business combinations

Amortization of intangible assets -

Sagem/Snecma

N/A 2,593N/A-(86)2,679Revenue

Deferred hedging

gain (loss)

Re-measurement of

revenue

Adjusted consolidated

income statement

Business combinationsHedge accountingConsolidated

income statement

Q3 2010(In €M)

PPA impacts -other business combinations

Amortization of intangible assets -

Sagem/Snecma

N/A 7,790N/A-(256)8,046Revenue

Deferred hedging

gain (loss)

Re-measurement of

revenue

Adjusted consolidated

income statement

Business combinationsHedge accountingConsolidated

income statement

9m 2010(In €M)


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q3 2010 revenue en - safran-group.com€¦ · q3 revenue 2010 - october 22, 2010 7 all revenue...

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