Thales. Bank of America Merrill Lynch Global Industrials & EU Autos Conference 2015 London 17 March 2015

Transcription

1 Thales Bank of America Merrill Lynch Global Industrials & EU Autos Conference 2015 London 17 March 2015

2 2 / Business environment Aerospace Avionics: continued positive dynamics for cockpit avionics and IFEC Space: telecom market recovers, remains highly competitive Transport Confirmed robust drivers Several prospects in both emerging markets and Europe Defence & Security Increasing geopolitical tensions Ongoing budget pressures in mature markets Persistent emerging markets growth

3 3 / 2014 highlights Ambition Boost performance programme delivers Strong operating results in Aerospace and Defence & Security but issues in Transport Continued growth of emerging markets Resilient domestic defence business Overall strong performance ex DCNS

4 4 / DCNS Very significant loss in 2014 after a comprehensive and indepth review of activities and programmes Difficulties mainly in energy diversification activities and some naval programmes Civil nuclear energy Barracuda submarine programme Action plan and outlook New management team Focus on core activities Improving project execution and competitiveness Gradual recovery Renewed management team, addressing challenges

5 5 / Strongly growing order intake, improved underlying performance m 14,500 12,750 Order intake 12, % 14,363 m 13,000 12,500 12,698 Sales +2% 12,974 11, (a) , , ,102 EBIT (b) m m +13% -3% 550 1, Free Operating Cash Flow % EBIT excl. DCNS (c) EBIT (a) In this presentation, all 2013 numbers have been restated to take into account the introduction of IFRS 10/11 (b) Non-GAAP measure: see definition in appendix (c) In this presentation, "excl. DCNS" means "excluding the impact of the 35% share of net result of DCNS"

6 6 / 2014: ex-dcns, all objectives met or exceeded Objective Actual Order intake Stable +11% reported +8% organic Sales Stable +2% reported -1% organic EBIT (a) Up 5 to 7% vs % excl. DCNS -3% incl. DCNS Growing orders, improving underlying profitability (a) Non-GAAP measure: see definition in appendix.

7 7 / 19 contracts above 100m 12,928m +11% 14,363m 3,139m 3,355m 4,701m 3,404m 6,169m 6,523m Unit value > 100m 10m < Unit value < 100m Unit value < 10m Order intake: +11%, book-to-bill = 1.11 Falcon Eye observation satellites (EAU) Air defence radars (France) Marshall military air traffic control (UK) Land defence systems (Australia) Inmarsat/Arabsat telecom satellite (UK / Saudi Arabia) Military communications network (Qatar) Meteosat satellite (EU) Koreasat telecom satellites (Korea) TK3S telecom satellite (Indonesia) Scorpion land defence (France) Exomars space programme (ESA) Egnos space programme (EU) Starstreak air defence (Indonesia) Gowind corvettes (Egypt) Mexico City urban security (Mexico) Observation satellite equipment (Germany) Olmedo-Orense HSL signalling (Spain) Talios optronics pod (France) Doha harbour security (Qatar)

8 8 / Emerging markets orders: over 40% growth vs RoW Middle East Asia 4.0bn + 1.3bn 4.3bn 0.6bn 3.0bn 1.1bn 0.4bn 1.9bn 0.9bn 1.4bn 1.7bn 1.5bn 1.7bn 2012 (a) (a) Restated following IFRS 10/11

9 9 / Summary P&L: from sales to EBIT m change total organic Sales 12,974 12,698 +2% -1% Gross margin 3,181 3,012 +6% +1% in % of sales 24.5% 23.7% Indirect costs (2,075) (2,012) +3% +0% in % of sales 16.0% 15.8% o/w R&D expenses (641) (612) +5% +1% in % of sales 4.9% 4.8% o/w M&S expenses (914) (894) +2% +0% in % of sales 7.0% 7.0% o/w G&A expenses (519) (506) +3% -0% in % of sales 4.0% 4.0% Restructuring costs (114) (122) -6% -7% Share of net result of equity-accounted affiliates excl. DCNS in % of sales 0.9% 1.0% % +34% EBIT (b) excl. DCNS 1, % +8% in % of sales 8.5% 7.6% Share of net result of DCNS (117) 40 EBIT (b) 985 1,011-3% -8% in % of sales 7.6% 8.0% (a) In this presentation, "organic" means "at constant scope and exchange rates" (b) Non-GAAP measure: see definition in appendix. Further improvement of gross margin, indirect costs under control Impact of DCNS losses

10 10 / EBIT bridge m % 1, , EBIT (a) DCNS 35% of net profit 2013 EBIT (a) excl. DCNS (a) Non-GAAP measure: see definition in appendix. (b) Organic variation Scope and FX Operational Restructuring performance charges (b) (b) Additional expensed R&D (b) 2014 EBIT (a) excl. DCNS DCNS 35% of net loss 2014 EBIT (a) Improved underlying operational performance

11 11 / EBIT by segment m total change organic Aerospace % % +20% +11% Transport % % -67% -68% Defence & Security % % +24% +21% EBIT - operating segments 1, % 1, % +14% +8% Other (55) (45) EBIT - excl. DCNS 1, % % +13% +8% DCNS (35% share of net result) (117) 40 EBIT - total % 1, % -3% -8% Strong performance in Aerospace and Defence & Security

12 12 / Aerospace: 2014 key figures m change total organic Order intake 5,024 4, % +11% Sales 5,014 4,713 +6% +1% EBIT (a) % +11% (a) Non-GAAP measure: see definition in appendix. in % of sales 10.1% 8.9% Increasing sales, EBIT continued improvement

13 13 / Transport: 2014 key figures m change total organic Order intake 1,652 1, % +14% Sales 1,402 1,447-3% -4% EBIT (a) % -68% (a) Non-GAAP measure: see definition in appendix. in % of sales 2.3% 6.7% Growing order intake New management team focused on gradually improving project execution

14 14 / Defence & Security: 2014 key figures m change total organic Order intake 7,608 7,114 +7% +4% Sales 6,480 6,455 +0% -2% EBIT (a) % +21% (a) Non-GAAP measure: see definition in appendix. in % of sales 9.6% 7.7% Resilient order intake in domestic markets Increased profitability mainly driven by good project execution

15 15 / Summary P&L: from EBIT to adjusted net income m EBIT (a) 985 1,011 Impairment of non-current operating assets 0 (3) Cost of net financial debt and other financial results (25) (23) Finance costs on pensions and other employee benefits (77) (70) Income tax (258) (234) Adjusted net income (a) Minorities (62) (39) Adjusted net income, Group share (a) Adjusted net income, Group share (a), per share (in ) (a) Non-GAAP measure: see definition in appendix. Tax rate of 29% in line with expectations DCNS losses impact adjusted EPS by 0.57

16 16 / Cash Flow m Operating cash flows before WCR changes 1,466 1,330 Change in WCR & contingency reserves (287) (301) Payment of contributions / pension benefits (122) (123) Financial interest paid (14) (31) Income tax paid (98) (40) Net cash flows from operating activities Net operating investments (443) (358) Free operating cash flow (a) (a) Non-GAAP measure: see definition in appendix. FOCF in line with 2013 levels as expected

17 17 / Movement in net cash m = 287m 1, ,006 Net cash Free operating cash flow Deficit payment - UK pensions Disposals/ acquisitions Dividends Other Net cash Strong net cash position

18 18 / Pensions m Externally funded countries United Kingdom 1, Netherlands Mainly internally Total 1, funded countries France Others Total 1,317 1,056 Net provision at 31 December 2,557 1,858 m Current service cost - adjusted P&L (based on total obligations) Interest charge - adjusted P&L (based on unfunded amount and interest rate at 1 Jan) Historically low interest rates drive increased pension deficit

19 19 / Dividend Dividend = 1.12 per share (a) Exceptionally increasing payout ratio from 35% to 40+% to mitigate impact of DCNS losses Reflecting positive momentum in our businesses and confidence in ongoing FOCF generation (a) Subject to the Annual General Meeting approval on 13 May 2015.

20 20 / Strategic focus Ambition 10 remains our roadmap Building a growing, more global and more profitable Thales Ambition Boost: a global performance programme Growth: emerging markets, larger contracts Competitiveness: execution, supply chain, engineering, support functions People: increased globalisation and diversity A shared strategic vision, powered by a comprehensive performance programme

21 21 / 2015 priorities Continue to improve our competitiveness Ambition Boost actions across all businesses and countries Fixing issues in Transport, monitoring and supporting DCNS recovery Deliver top line growth and accelerate our globalisation Increasing local footprint in emerging markets Targeting large contracts Developing our marketing approach Develop a more diversified talent pool Book-to-bill significantly above 1, confirmed return to top line growth Continued EBIT growth

22 22 / Objectives 2015 Order intake Sales Remaining at a high level, growing emerging markets contribution Low single digit growth EBIT (a) 1,130-1,150m (b) 2017/18 Sales Moderate growth EBIT (a) margin % (a) Non-GAAP measure: see definition in appendix. (b) Based on foreign exchange rates as of.

23 Annexes

24 24 / Upcoming events Q sales 6 May 2015 (before market) Annual General Meeting 13 May 2015 Dividend payment (a) 29 May 2015 Paris Air Show June 2015 H results 23 July 2015 (after market) Q3 and 9m 2015 sales 21 October 2015 (a) Subject to the Annual General Meeting approval on 13 May 2015, ex-dividend date 27 May 2015.

25 25 / Order intake by destination m total change organic France 3,594 3,343 +8% +3% United Kingdom 1,326 1,256 +6% -1% Other European countries 3,173 2, % +9% Middle East 13% RoW 5% France 25% Europe 8,093 7, % +5% North America 1, % +7% Australia/NZ % +49% Asia 1,701 1, % +14% Middle East 1,929 1, % +37% Rest of the world 637 1,108-43% -42% Emerging markets 4,267 3,988 +7% +7% Total 14,363 12, % +8% Asia 12% Australia/ NZ 7% North America 7% 2014 Other European countries 22% UK 9%

26 26 / Sales by destination m total change organic France 3,419 3,497-2% -2% United Kingdom 1,314 1,440-9% -13% Other European countries 2,938 2,708 +8% +0% Europe 7,671 7,645 +0% -4% North America 1,350 1,479-9% -15% Australia/NZ % +1% Asia 1,823 1, % +12% Middle East % +6% Rest of the world % +23% Emerging markets 3,286 2, % +12% Total 12,974 12,698 +2% -1% Asia 14% Australia/ NZ 5% N America 11% Middle East 7% RoW 4% 2014 Other European countries 23% France 26% UK 10%

27 27 / 2014 adjusted net result m Consolidated P&L 2014 Amortisation of intangible assets (PPA) Disposal of assets and others Change in fair value of derivative FX instruments Actuarial gains/losses on other postretirement benefits Adjusted P&L 2014 Sales 12,974 12,974 Cost of sales (9,792) (9,792) R&D (641) (641) SG&A costs (1,434) (1,434) Restructuring costs (114) (114) Amortisation of intangible assets (PPA) (104) Income from operations 889 Impairment of non-current operating assets (*) Disposal of assets, change in scope and others 249 (249) 0 Share in net income (loss) of equity affiliates (34) 27 (7) Income of operating activities incl. share in net income of equity affiliates 1,104 EBIT 985 Impairment of non-current operating assets --- (*) 0 Cost of net financial debt 2 2 Other financial income (expense) (40) 12 (27) Finance costs on pensions and other employee benefits (90) 13 (77) Income tax (214) (35) (1) (4) (4) (258) Net income (loss) Minorities (48) (15) 0 (63) Net income (loss), Group share (249) (*) included within "Income of operating activities incl. share in net income of equity affiliates" in the consolidated P&L and within "Net income" in the adjusted P&L

28 28 / 2013 adjusted net result m Consolidated P&L 2013 (proforma IFRS 10/11) Amortisation of intangible assets (PPA) Disposal of assets and others Change in fair value of derivative FX instruments Sales 12,698 12,698 Cost of sales (9,685) (9,685) R&D (612) (612) SG&A costs (1,400) (1,400) Restructuring costs (122) (122) Amortisation of intangible assets (PPA) (62) 62 0 Income from operations 817 Impairment of non-current operating assets (3) --- (*) Disposal of assets, change in scope and others 16 (16) 0 Share in net income (loss) of equity affiliates Income of operating activities incl. share in net income of equity affiliates 936 EBIT 1,011 Impairment of non-current operating assets --- (*) (3) Cost of net financial debt (9) (9) Other financial income (expense) (45) 31 (14) Finance costs on pensions and other employee benefits (69) (0) (70) Income tax (204) (21) 1 (11) (234) Net income (loss) (15) 20 (0) 681 Minorities (35) (3) 2 (3) (1) (39) Net income (loss), Group share (13) 18 (1) 642 (*) included within "Income of operating activities incl. share in net income of equity affiliates" in the consolidated P&L and within "Net income" in the adjusted P&L Actuarial gains/losses on other postretirement benefits Adjusted P&L 2013 (proforma IFRS 10/11)

29 29 / Q orders m Q Q total change organic Aerospace 1,869 1,938-4% -8% Transport % +61% Defence & Security 4,082 3, % +25% Other Total 6,824 5, % +17%

30 30 / Q sales m Q Q total change organic Aerospace 1,731 1, % +3% Transport % -3% Defence & Security 2,243 2,156 +4% +0% Other Total 4,560 4,302 +6% +1%

31 31 / Main programmes in backlog December 2014 More than 600m Iridium (USA) Mirage 2000 upgrade (India) Between 400m and 600m Rafale (France) Contact software defined radio (France) Meteosat (EU) Between 200m and 400m In-service support of naval sensors SSOP (UK) Observation satellite (Africa) Falcon Eye observation satellite (UAE) QE-class aircraft carriers (UK) Air defence radars (France) Marshall - military air traffic control (UK) Land defence systems (Australia) Defence communication network (France)

32 32 / Thales shareholding structure December 2014 o/w Employees 2.0% French State (a) 26.4% Free float 48.3% Dassault Aviation 25.3% (a) French State shares are held directly and indirectly through TSA, a 100% state-owned holding company

33 33 / Leadership Team Marc Darmon Executive Vice-President Secure Communications and Information Systems Alex Cresswell Executive Vice-President Land & Air Systems Pierre Eric Pommellet Executive Vice-President Defence Mission Systems Gil Michielin Executive Vice-President Avionics Jean-Loïc Galle Executive Vice-President Space Millar Crawford Executive Vice-President Transportation Systems Patrice Caine Chairman and Chief Executive Officer Michel Mathieu Senior Executive Vice-President Chief Operating Officer and Chief Performance Officer Pascale Sourisse Senior Executive Vice-President International Development David Tournadre Senior Executive Vice-President Human Resources Pascal Bouchiat Senior Exective Vice-President Chief Finance Officer Hervé Multon Executive Vice-President Strategy Research and Technology

34 34 / Definition of non-gaap measures This presentation contains non-generally Accepted Accounting Principles (GAAP) financial measures. Thales regards such non-gaap financial measures as relevant operating and financial performance indicators for the Group, as they allow non-operating and non-recurring items to be excluded. Thales definitions for such measures may differ from similarly titled measures used by other companies or analysts. Organic: at constant scope and exchange rates. Book-to-Bill ratio: ratio of orders received to sales. EBIT: income from operations; plus the share of net income or loss of equity affiliates less: amortisation of intangible assets acquired (PPA). Emerging Markets: All countries in Middle East, Asia, Latin America and Africa Adjusted net income: net income, less the following elements, net of the corresponding tax effects: (i) amortisation of intangible assets acquired, (ii) disposal of assets, change in scope of consolidation and other, (iii) change in fair value of derivative foreign exchange instruments (recorded in "other financial results" in the consolidated accounts), (iv) actuarial gains or losses on long-term benefits (accounted within the "finance costs on pensions and employee benefits" in the consolidated accounts). Adjusted EPS: ratio of adjusted net income (as defined above) to average number of shares outstanding. Free Operating Cash Flow: net cash flow from operating activities, less: capital expenditures, less: deficit payments on pensions in the United Kingdom.

35 Together. Safer. Everywhere. THALES Tour Carpe Diem Paris La Defense Cedex France This presentation may contain forward-looking statements. Such forward-looking statements are trends or objectives, as the case may be, and shall not be construed as constituting forecasts regarding the Company s results or any other performance indicator. These statements are by nature subject to risks and uncertainties as described in the Company s registration document ("Document de référence") filed with Autorité des Marchés Financiers. These statements do not therefore reflect future performance of the Company, which may be materially different.