Download - Tier 1 supplier in Aerospace, Defence & Security · PDF fileFree Cash Flow €740M ... for wheels and brakes systems including 737NG, 787 ... in Avionics of the Integrated Cockpit

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0 / INVESTOR ROADSHOWS / MARCH 2015 / Q3 REVENUE 2011 / OCTOBER 21, 2011 /

/ March 2015 /

Tier 1 supplier in

Aerospace, Defence & Security

Investor roadshows

1 /

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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

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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

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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 /

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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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52 / INVESTOR ROADSHOWS / MARCH 2015 /