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(c) Thales, Nov 2012
Investor roadshows
and conferencesNovember 2012
(c) Thales, Nov 2012
Thales at a glance
(c) Thales, Nov 2012
3 /3 / Thales in a snapshot
FY12e revenues(*) : €13bn+
FY12e EBIT(**) margin: 6%
Balanced defence/civil
business portfolio,sharing technologies
75% of sales from
international markets
€1.3bn efficiency plan
on track and delivering
Resilient top line supported by commercial and EM exposure
EBIT growth potential through 2015
Aerospace
& Transport
45% of
revenues(*)
Defence &
Security
55% of
revenues(*)
Electronic systems, C4ISR,
networks, intelligence for air, naval and land
Urban and critical
infrastructure security,
Cybersecurity
Avionics,
In-flight entertainment
Telecom, observation,
navigation and
exploration satellites
Rail traffic management,
Fare collection
(*) Revenues before the impact of the proportionate consolidation of DCNS at 35%(**) EBIT margin after restructuring and before impact of the proportionate consolidation of DCNS at 35% and purchase price allocation ("PPA").
(c) Thales, Nov 2012
4 /4 / At the heart of operational priorities
Defence offering
meeting operational priorities
� Electronic systems
� C4ISR, networks, intelligence,
cyber, services
Successful exposure
to growing civil markets
� Civil aeronautics
� Space
� Ground transport
� Security
Mitigating defence cuts, capturing civil growth
(c) Thales, Nov 2012
5 /5 / Leading global market positions
50% of revenues in the Top 3 worldwide, 75% in the Top 3 in Europe
# Scope: worldwide # Scope: Europe
POSITION
#1 Defence - Air Defence
#3 Defence - Surface radars
#1 Air Traffic Management
#2 Defence - Military tactical radios
#1 Defence - Sonars
#3 Defence - Naval electronics
#3 Defence - Missile Electronics
#2 Cyber security
#3 Space - Civil satellites
#1 Space - Military satellite systems
#1 Aeronautics - Tubes RFM & Microwave
#2 Aeronautics - IFEC
#3 Aeronautics - Avionics
#1ex Ground Transportation - Rail Traffic Control
DEFENCE
&
SECURITY
AEROSPACE
&
TRANSPORT
(c) Thales, Nov 2012
Business performance
(c) Thales, Nov 2012
7 /7 / Overview as at 30 September 2012
Balanced portfolio provides business resilience
� Aerospace & Transport order intake up 17% y/y
� Defence & Security orders up y/y excluding exceptional positive
impact of Indian Mirage upgrade contract in Q3 11
� Emerging markets continue to be strong
Defence offering well positioned
as European and US budgets are under constraint
Probasis efficiency plan continued rollout
Portfolio optimisation
(c) Thales, Nov 2012
8 /8 / Q3 and 9m 12 key financials
Resilient order intake as civil activities offset lower defence orders
(Indian Mirage upgrade booked in Q3 11)
Slightly growing revenues at constant scope, in line with expectations
(*) excluding the impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%
in €m Q3 2012 Q3 2012 Q3 2011
excl. DCNS
impact(*)total
excl. DCNS
impact(*)organic
Order intake 2 939 2 708 3 214 -9% -16% -17%
Revenues 2 887 2 699 2 645 +9% +2% -1%
Book-to bill ratio 1,02 1,00 1,22
in €m 9m 2012 9m 2012 9m 2011
excl. DCNS
impact(*)total
excl. DCNS
impact(*)organic
Order intake 9 040 8 547 8 455 +7% +1% -1%
Revenues 9 300 8 662 8 613 +8% +1% -2%
Book-to bill ratio 0,97 0,99 0,98
change
change
(c) Thales, Nov 2012
9 /9 / 9m 12 main commercial successes
Strong, well-balanced order intake
Selected orders over €100m
� Main lines signalling – Fjernebanen West (Denmark)
� "Contact" software defined radios (France)
� Exomars programme (ESA)
� In-flight entertainment systems (North America)
� NSEW -"Compass" urban rail line (Singapore)
� Naval radar systems (Netherlands)
� Telecom satellite (Asia)
� Bushmaster vehicles (Australia)
Other key orders
� Optronics (Middle East)
� Naval defence systems (Middle East)
� Naval radar electronic surveillance (UK)
� Eutelsat 8WB satellite (France)
� "Ampang" line –Kuala Lumpur metro (Malaysia)
€4 571m €4 951m €4 951m
€828m€911m €911m
€3 056m€2 685m €2 685m
€493m
9m 2011 9m 2012
excl. DCNS
impact
9m 2012
Europe North America
Emerging countries DCNS impact (*)
Q3 orders
M2000India
€4 422m €4 889m €4 889m
€2 368m €2 368m
€2 016m€1 296m €1 296m
€493m
€2 017m
9m 2011 9m 2012
excl. DCNS
impact
9m 2012
Unit value < €10m €10m < Unit value < €100m
Unit value > €100m DCNS impact(*)
(*) impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%
Total: €8,455m
Total: €8,547m
Total: €9,040m
(c) Thales, Nov 2012
10 /10 / Probasis efficiency plan: on track
Non-quality costs
� Increased rigour in bid evaluation and
project execution
� Simplified and clearer processes
� Tighter organisation and governance
� Skills management
Supply chain
� More pooled procurement
� Product policy:
streamlining product lines
SG&A/Support functions
� IT/IS and site rationalisation
� Delayering the organisation
� Shared services
€250m of additional net P&L benefits expected between 2012 and 2014
Probasis - Expected net P&L benefits
< 2012 2012e 2013e 2014e
+€50m
+€100m
+€100m
(c) Thales, Nov 2012
11 /11 / Portfolio optimisation
IT services
– Switzerland, Spain,Argentina, Austria
Completed – 2011
Civil fixed-wing
aircraft simulation – UKCompleted – Aug. 2012
Business solutions
IT services – FranceCompleted – Oct. 2012
Diehl Aircabin
49% interest – GermanyOngoing project
Elettronica
33% interest – ItalyOngoing project
Pursuing the implementation of our divestments programme
(c) Thales, Nov 2012
12 /12 / France: update on current situation
Defence draft budget
White Book on defence expected in Q1 2013
Proposed tax measures: a moderate EPS headwind
� Cap on debt interest deductibility
� Tax on dividends
� Increased social charges
on employee profit-sharing schemes
� R&D tax credit left untouched
A defence budget pending White Book release
(c) Thales, Nov 2012
13 /13 / 2012 objectivesexcluding DCNS impact (*)
Book-to-bill ratio slightly below 1
Revenues slight increase
EBIT margin (**) 6%
Confirmed objective of underlying performance improvement
despite economic uncertainties in Europe
(**) after restructuring and before impact of purchase price allocation ("PPA")
(*) excluding the impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%
(c) Thales, Nov 2012
14 /14 / Investment drivers
Resilient top line
� Defence offering at the core of network-centric warfare
operational priorities
� Civil activities growth potential
� 75% of international sales, 30% of emerging markets sales
Significant profitability uplift potential
� €1.3bn Probasis efficiency plan well underway, on track
� Delivering €250m net P&L benefits between 2012 and 2014
Resilient top line supported by commercial and EM exposure
EBIT growth potential through 2015
(c) Thales, Nov 2012
Annexes
(c) Thales, Nov 2012
16 /16 / Upcoming events
FY 2012 results 28 February 2013
Q1 13 revenues 25 April 2013
AGM 24 May 2013
(c) Thales, Nov 2012
17 /17 / H1 12 EBIT
(*) excluding the impact of the consolidation under the proportionate method of DCNS at 35% vs. consolidation under equity method at 35%(**) After restructuring and before purchase price allocation (PPA) impact
Improved underlying EBIT margin
in €m H1 2012 H1 2012 H1 2011
excl.
DCNS impact (*) total organic
Order intake 6 102 5 839 5 241 +16% +9%
Revenues 6 413 5 963 5 968 +7% -2%
Gross margin 1 454 1 356 1 383 +5% -4%
in % of revenues 22,7% 22,7% 23,2%
Indirect costs (1 076) (1 015) (1 002) +7% +0%
in % of revenues 16,8% 17,0% 16,8%
o/w R&D expenses (304) (292) (291) +4% +2%in % of revenues 4,7% 4,9% 4,9%
o/w SG&A expenses (772) (723) (711) +9% 0%in % of revenues 12,0% 12,1% 11,9%
Restructuring costs (40) (40) (78) -49%
in % of revenues 0,6% 0,7% 1,3%
EBIT (**) 338 301 303 +11% +1%
in % of revenues 5,3% 5,0% 5,1%
change
(c) Thales, Nov 2012
18 /18 / H1 12 net result
(*) excluding the impact of the consolidation under the proportionate method of DCNS at 35% vs. consolidation under equity method at 35%(**) After restructuring and before purchase price allocation (PPA) impact
Resilient EPS despite increased pension charge
in €m H1 2012H1 2012
excl. DCNS impact (*)H1 2011
EBIT (**) 338 301 303
Impairment of non-current operating assets 0 0 (4)
Net capital gains (losses) and others (3) (3) 8
335 298 307
Cost of net financial debt (8) (13) (25)
Other financial results (16) (21) (32)
Other components of pension charges (75) (74) (37)
Income tax (**) (73) (58) (65)
Equity in unconsolidated affiliates (**) 11 42 24
Net income, Group share (**) 175 175 173
Net income per share (in €) (**) 0,88 0,88 0,88
Income of operating activities (**)
(c) Thales, Nov 2012
19 /19 / Defence & Security: H1 12 key figures
Increasing orders, resilient revenues
(*) After restructuring and before purchase price allocation (PPA) impact(**) As of 31 December 2011
in €m H1 2012 H1 2011
total organic
Order intake 3 039 2 499 +22% +18%
Order book at 30 June 14 351 14 375 (**) 0% -1%
Revenues 3 228 3 250 -1% -4%
EBIT (*) 191 195 -2% -5%
in % of revenues 5,9% 6,0%
change
(c) Thales, Nov 2012
20 /20 / Aerospace & Transport: H1 12 key figures
Continued growth
Profitability improvement through focus on project execution
in €m H1 2012 H1 2011
total organic
Order intake 2 758 2 690 +3% +0%
Order book at 30 June 11 563 11 372 (**) +2% +1%
Revenues 2 691 2 640 +2% 0%
EBIT (*) 140 101 +39% +42%
in % of revenues 5,2% 3,8%
change
(*) After restructuring and before purchase price allocation (PPA) impact(**) As of 31 December 2011
(c) Thales, Nov 2012
21 /21 / H1 12 cash flow
Improved FOCF, confirmed objective of positive FOCF for FY12
in €m H1 2012H1 2012
excl. DCNS impact(*)H1 2011
Operating cash flow 521 477 524
Change in WCR & contingency reserves (464) (357) (571)
Payment of contributions / pension benefits (48) (48) (50)
Financial interest paid (21) (27) (29)
Income tax paid (54) (35) (32)
(66) 10 (158)
Net operating investments (137) (120) (108)
o/w capitalised R&D (6) (6) (2)
Free operating cash flow (203) (110) (266)
Net (acquisitions) / disposals (8) (4) (18)
Deficit payments on pensions in the UK (31) (31) (29)
Dividends (106) (106) (14)
FX and others 49 45 (39)
Change in net financial debt (299) (206) (366)
Net operating cash flow
(*) excluding the impact of the consolidation under the proportionate method of DCNS at 35% vs. consolidation under equity method at 35%
(c) Thales, Nov 2012
22 /22 / 9m 12 order intake by sector
Defence & Security down vs. high comparables (Indian Mirage in Q3 11)
Aerospace & Transport higher in all segments
9m 2012 9m 2011
total organic
Defence & Security 4 251 4 737 -10% -13%
Aerospace & Transport 4 235 3 634 +17% +14%
Other and discontinued activities 61 84
Total
excluding DCNS impact(*)8 547 8 455 +1% -1%
DCNS impact (*) 493 -
Total 9 040 8 455 +7% -1%
in €m change
(*) impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%
(c) Thales, Nov 2012
23 /23 / 9m 12 revenues by sector
Revenues slightly up on FX tailwind
9m 2012 9m 2011
total organic
Defence & Security 4 683 4 682 +0% -4%
Aerospace & Transport 3 911 3 818 +2% +0%
Other and discontinued activities 68 113
Total
excluding DCNS impact (*)8 662 8 613 +1% -2%
DCNS impact (*) 638 -
Total 9 300 8 613 +8% -2%
in €m change
(*) impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%
(c) Thales, Nov 2012
24 /24 / 9m 12 order intake by destination
(*) excluding the impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%
total organic
France 1 982 2 001 -1% -1%
UK 517 563 -8% -14%
Rest of Europe 2 452 2 007 +22% +22%
Europe 4 951 4 571 +8% +8%
North America 911 828 +10% +5%
Asia-Pacific 1 726 2 188 -21% -24%
Middle East 701 610 +15% +9%
Rest of the world 258 258 +0% +1%
Emerging countries 2 685 3 056 -12% -16%
Total - excl. DCNS impact(*) 8 547 8 455 +1% -1%
in €m 9m 2012 9m 2011change
(c) Thales, Nov 2012
25 /25 / 9m 12 revenues by destination
(*) excluding the impact of the proportionate consolidation of DCNS at 35% vs. consolidation under equity method at 35%
total organic
France 2 316 2 239 +3% +3%
UK 1 077 1 024 +5% -2%
Rest of Europe 2 192 2 218 -1% -1%
Europe 5 585 5 481 +2% +1%
North America 939 865 +9% +4%
Asia-Pacific 1 352 1 288 +5% -1%
Middle East 446 611 -27% -29%
Rest of the world 340 368 -8% -8%
Emerging countries 2 138 2 267 -6% -10%
Total - excl. DCNS impact 8 662 8 613 +1% -2%
in €m 9m 2012 9m 2011change
(c) Thales, Nov 2012
THALES – 45, rue de Villiers – 92526 Neuilly-sur-Seine Cedex – Francewww.thalesgroup.com
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.
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