2012
With adjusted revenue up 14% and adjusted recurring operating income up 23% full-year outlook confirmed
KEY NUMBERS FOR FIRST-HALF 2012
● First-half 2012 adjusted revenue was Euro 6,413 million, up 14.1% year-on-year (5.2% organic).
● Adjusted recurring operating income at Euro 681 million (10.6% of revenue) at a hedged rate of USD1.32 to the Euro, up 23% year-on-year. One-off items totalled Euro (19) million, therefore profit from operations was Euro 662 million.
● Adjusted net income - group share up 30% from first-half 2011 at Euro 411 million (Euro 0.99 per share).
● Consolidated (non-adjusted) net income - group share at Euro 315 million (Euro 0.76 per share).
● Net debt position of Euro 1,129 million as of June 30, 2012, with free cash flow generation of Euro 104 million. A dividend of Euro 0.62 per share was approved by the shareholders during the Annual General Meeting and the remaining portion of Euro 0.37 was paid in June, a Euro 0.25 interim payment having been made in December 2011.
● H1 2012 civil aftermarket was up 8.1% in USD terms (in line with full-year guidance of high single digit growth); it comes from low double digit global CFM56 spares revenue growth and flattish performance for widebody engines, which have reached a plateau after 3 years of strong growth.
● Full-year 2012 guidance confirmed taking into account solid first-half performance and the new currency assumptions. Safran now expects revenue to increase at a rate in the low 2 digit (at a new estimated average spot rate of USD 1.30 to the Euro) while recurring operating income should increase by around 20% (at a hedged rate of USD 1.32 to the Euro). Although the very strong OEM activity required significant working capital resources in first-half, free cash flow is expected to represent about a third of the recurring operating income.
All figures in this press release represent adjusted data, except when noted.
EXECUTIVE COMMENTARY
Chairman and CEO Jean-Paul Herteman commented:
“Aerospace markets continue to grow faster than the global economy, driven by emerging market demand for new aircraft and the need for more fuel efficient aircraft in developed markets, notably in the United States. More than 740 LEAP engines were ordered at Farnborough air show, with current combined market share reaching 75% of Airbus, Boeing and COMAC single aisle aircraft. Our equipment business is also gaining momentum with the ramp-up in production rates of recent programs.
In the first six months of the year, our first-class CFM56 franchise continued to produce results with record production rates ramping up and 2-digit growth in spares revenue, notably for the most recent generation of engines. The unmatched installed base and increasing flight hours will provide several years of expansion in aftermarket services.
Our security business, although sensitive to some regional economic cycles and political uncertainty, achieved satisfactory organic growth. Our breakthrough technology, scale and diversity should bring the necessary ingredients to capture further profitable growth.
Overall, we recorded 14% revenue growth delivering close to 23% growth in recurring operating income while investing 25% more in self-funded R&D as well as in working capital to support increasing volumes. Our first-half performance and outlook for 2012 indicate positive momentum should continue into this year and beyond.”
KEY BUSINESS HIGHLIGHTS FOR FIRST-HALF 2012
● CFMI booked close to 1,000 engine orders and commitments (742 LEAP and 180 CFM56) during the Farnborough air show for a list price of more than $12.6bn. LEAP order book to date stands at more than 3,700 engines.
● Cessna Aircraft Company selected the new-generation Silvercrest engine to power its new Citation Longitude business jet. Safran passed a major milestone starting assembly of the first engine, in preparation for the first ground test.
● Herakles: Safran finalized the merger of SME (specializing in energetic materials) and Snecma Propulsion Solide (a specialist in solid rocket motors for missiles and launchers) that makes Safran a fully integrated world leader in solid propulsion, which is a key to both ballistic missiles and launch vehicles.
● Safran and MTU Aero Engines have signed a MoU to form a JV in the field of the development of FADECS and key safety-critical software and electronics for aviation applications.
● Optronics: Safran raised its ownership in the IR matrix expert Sofradir to 50%, finalized its agreement with Thales to create Optrolead and acquired a Brazilian company Optovac (15 employees).
● Safran and Honeywell launched Electric Green Taxiing System testing on a Boeing 737NG in partnership with TUIfly, and continued extensive testing in parallel on a specifically acquired used A320.
OUTLOOK
Full-year 2012 guidance is confirmed taking into account solid first-half performance and new Euro/USD currency assumptions. Safran now expects revenue to increase at a rate in the low 2 digit (at a new estimated average spot rate of USD 1.30 to the Euro) while recurring operating income should increase by around 20% (at a hedged rate of USD 1.32 to the Euro). Free cash flow is expected to represent about a third of the recurring operating income taking into account the expected increase in R&D investments as well as working capital requirements to cope with rising production rates.
Full-year 2012 outlook is based on the following underlying assumptions:
● Healthy increase in aerospace OE deliveries
● Civil aftermarket up in the high single digits (in USD terms)
● Incremental R&D cash effort of around Euro 200 million (vs. 2011)
● Growth in Security, notably acquisition-driven with MorphoTrust (ex- L-1 ID)
● Profitability improvement in Defence, notably in Avionics
● Continued improvement in Equipment
● On-going Safran+ plan to enhance the cost structure and reduce overhead.
