Bombardier Inc. Class A · TSX:BBD.A
Bombardier Inc. Class A — Investor Day (November 2015)
93 slides from Bombardier Inc. Class A's investor day presentation, Nov 24, 2015
Slide 1: 2015 Bombardier Investor Day
© Bombardier Inc. or its subsidiaries. All rights reserved. 2015 Bombardier Investor Day November 24, 2015 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2 of this presentation
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation includes forward-looking statements, which may involve, but are not limited to: statements with respect to Bombardier Inc.’s (the Corporation) objectives, guidance, targets, goals, priorities, market and strategies, financial position, beliefs, prospects,
Slide 3: Assumptions
Assumptions Forward-looking statements included in this presentation are based on the following assumptions: • the satisfaction of all conditions to completion of the previously announced investment in Bombardier Transportation by the Caisse de dépôt et placement du Québec and the previously announc
Slide 4: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 5: Investor Day 2015 Opening statement
Investor Day 2015 Opening statement © Bombardier Inc. or its subsidiaries. All rights reserved. 4 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2 of this presentation
Slide 6: Overview of Bombardier
Overview of Bombardier Global aerospace and rail leader Business aircraft Transportation © Bombardier Inc. or its subsidiaries. All rights reserved. Commercial aircraft Aerostructures 5 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2 of this prese
Slide 7: De-risking the business
De-risking the business Recent actions taken Strengthened the § Hired industry veterans team § Strengthened functional leadership © Bombardier Inc. or its subsidiaries. All rights reserved. § Announced Quebec investment in C Series1 Resolved liquidity § Announced CDPQ investment in BT1 § Completed C
Slide 8: Leadership team
Leadership team Industry veterans and functional experts New leaders Alain Bellemare President & Chief Executive Officer BUSINESS SEGMENTS FUNCTIONAL DISCIPLINES © Bombardier Inc. or its subsidiaries. All rights reserved. Fred Cromer John Di Bert Jim Vounassis President Chief Financial Officer Chief
Slide 9: 2015 liquidity profile
2015 liquidity profile Bombardier expected liquidity going forward Cash, commitments, and credit facilities [$USB] ~6.5 © Bombardier Inc. or its subsidiaries. All rights reserved. 1.0 1.5 ~4.0 Expected CDPQ Quebec 2015 expected year 2015 BT minority C Series end liquidity and Year end placement inve
Slide 10: Strategic roadmap
Strategic roadmap Three phases to shareholder value creation 2015 2016 2017 2018 2019 2020 DE-RISK Liquidity and programs © Bombardier Inc. or its subsidiaries. All rights reserved. RE-BUILD Earnings and cash flow DE-LEVERAGE Balance sheet DE-RISK RE-BUILD DE-LEVERAGE § Secure liquidity § C Series r
Slide 11: 2016 transition year
2016 transition year Pressure on revenue and earnings 2016 YoY change Drivers © Bombardier Inc. or its subsidiaries. All rights reserved. § CDPQ1 Liquidity Strong § Gov. of Quebec1 § BBA backlog Cash usage Improved stability § BT deliveries § Global 5000/6000 Revenue Lower production rate reset § Gl
Slide 12: Transformation plan
Transformation plan Key levers to achieve superior financial performance Rebuild earnings and cash flow © Bombardier Inc. or its subsidiaries. All rights reserved. Market leadership Value creation pillars positions REVENUE OPERATIONAL BUSINESS MODEL PORTFOLIO GROWTH IMPROVEMENTS ENHANCEMENTS STRATEG
Slide 13: 2020 financial objectives
2020 financial objectives Solid financial performance 2020 Objectives $US Drivers © Bombardier Inc. or its subsidiaries. All rights reserved. $25B+ § C Series Revenue § Global 7/8000 ~6% CAGR1 § BT Backlog EBIT margin ~7-8% § Operational transformation § Business model enhancement § Disciplined capi
Slide 14: 2020 business segment details
2020 business segment details Achievable financial objectives 2020 Objectives Peers Revenue EBIT Best in class target margins peer EBIT $USB % % © Bombardier Inc. or its subsidiaries. All rights reserved. Transportation 10+ 8+ 7.82 Business aircraft 10+ 8-10 18.63 Commercial aircraft 5.5+ Positive 1
Slide 15: Investor Day 2015 Closing remarks
Investor Day 2015 Closing remarks § Liquidity position secured1 © Bombardier Inc. or its subsidiaries. All rights reserved. § Strong team in place § Transformation plan defined and underway § Turning attention to execution 1. Funds from CDPQ will be disbursed in Q1 2016 and from the Government of Qu
Slide 16: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 17: Leading transformation
Leading transformation Drawn from experience Landscape Process © Bombardier Inc. or its subsidiaries. All rights reserved. Spend Metrics Practices Language Organization Governance 16 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2 of this presenta
Slide 18: Overview of our operations
Overview of our operations Global footprint and reach © Bombardier Inc. or its subsidiaries. All rights reserved. 74,000 80 4 Production & Employees Business Segments Engineering sites $14B $4B $14B Direct product costs Indirect costs Inventory 1. Figures estimated as of Jan 1 2015 except direct pro
Slide 19: Transformation plan: Grow cash and earnings
Transformation plan Grow cash and earnings Cumulative FCF targets from Focus areas operational improvement [$USB] Identified potential 6.0-6.5 © Bombardier Inc. or its subsidiaries. All rights reserved. Improvement objective Direct product costs ▪ 175-200bps improvement target 2.5-3.0 Indirect costs
Slide 20: Direct product costs
Direct product costs EXAMPLES 175-200bps improvement target1 from direct product costs One procurement Manufacturing footprint © Bombardier Inc. or its subsidiaries. All rights reserved. CPO Business segment procurement Leveraging scale Centers of excellence 1. Based on improvement objectives target
Slide 21: Indirect cost
Indirect cost EXAMPLES 75-100bps improvement target1 from indirect costs Indirect Indirect goods & services labor © Bombardier Inc. or its subsidiaries. All rights reserved. 5%-10% cost savings Target 2X employees1 target1 in global workshare 1. Based on improvement objectives targeted by 2020. 20 P
Slide 22: Inventory
Inventory EXAMPLES 0.25-0.50 improvement target1 in turns Lead time Vendor managed Partnerships reduction inventory © Bombardier Inc. or its subsidiaries. All rights reserved. Challenger Forward stocking Aftermarket assembly line locations spare parts 21 1. Based on improvement objectives targeted b
Slide 23: New programs
New programs Driving target cost to ensure revenue conversion C Series Global 7000 © Bombardier Inc. or its subsidiaries. All rights reserved. Learning curve Entry into service 22 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2 of this presentatio
Slide 24: Our transformation process
Our transformation process A gated process and cascading governance PHASED APPROACH ACCOUNTABILITY Central Transformation © Bombardier Inc. or its subsidiaries. All rights reserved. 1 Targets Presidents 2 Engagement VP-GMs 3 Execution Director / Managers 400+ people 23 Please refer to our disclosure
Slide 25: Timing of the transformation
Timing of the transformation Benefits to accrue over different time horizons © Bombardier Inc. or its subsidiaries. All rights reserved. Sustaining Transformational Quick fix 2016 2017 2018 2019 2020+ 24 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 a
Slide 26: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 27: Procurement organization
Procurement organization A new holistic view on smart procurement Nico Buchholz Corporate CPO © Bombardier Inc. or its subsidiaries. All rights reserved. Charles Stephen Cowan Jim McQueeney Sylvain Leclerc O’Donnell Procurement BAES Procurement BBA Procurement BCA Procurement BT … Sites Sites Sites
Slide 28: Procurement spend overview
Procurement spend overview Addressable spend base is very large and provides opportunity for savings Transportation Aerospace segments TOTAL © Bombardier Inc. or its subsidiaries. All rights reserved. Direct spend1 $3.5B $4.5B $8.0B Indirect spend2 $0.6B $0.9B $1.5B 1. Purchased bill of material 27
Slide 29: Renewed approach to procurement
Renewed approach to procurement Key steps to success in major supplier negotiations © Bombardier Inc. or its subsidiaries. All rights reserved. BBA BCA Commercial leverage $200M+ Develop fact base recurring Execute annual New team savings1 target structure and key BAES BT accounts Design to cost Sta
Slide 30: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 31: Financial performance roadmap
Financial performance roadmap Revenue growth profile © Bombardier Inc. or its subsidiaries. All rights reserved. EBIT improvement roadmap 2016 : Transition year 2018 : Mid-point target FCF profile 30 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2
Slide 32: Revenue growth target
Revenue growth target Driven by innovation and market leadership [$US, 2015-2020] $25B+ © Bombardier Inc. or its subsidiaries. All rights reserved. BAES1 BCA BBA Global Rate Reset BT Transportation Backlog 2015 2016 2017 2018 2019 2020 Baseline Objectives 31 1. BAES revenues are net of intercompany
Slide 33: EBIT improvement roadmap
EBIT improvement roadmap Transformation strategy execution drives profitability targets EBIT target with potential sources of change [$US, 2015-2020] © Bombardier Inc. or its subsidiaries. All rights reserved. 2015 2016 Global Revenue Business Operational R&D 2020 baseline 5000/6000 conversion model
Slide 34: 2016: Transition year
2016 : Transition year Expect pressure on earnings and progress on free cash flow Drivers 2015-2016 Year Over Year Revenue EBIT Free Cash Flow Transportation + + + © Bombardier Inc. or its subsidiaries. All rights reserved. Business Aircraft - - - - + + Commercial Aircraft + - - Neutral Aerostructur
Slide 35: 2018: Mid-point target
2018 : Mid-point target Transformation plan delivering sustainable financial performance 2018 Objectives 2020 Objectives $US $US © Bombardier Inc. or its subsidiaries. All rights reserved. Revenue $20B+ $25B+ EBIT margin improvement ~ 5-6% ~ 7-8% objective FCF Positive >80% net income 34 Please refe
Slide 36: C Series $2B free cash flow profile
C Series $2B free cash flow profile Positioned for positive FCF target in 2020 / 2021 Free cash flow usage target To be funded by Quebec Government1 © Bombardier Inc. or its subsidiaries. All rights reserved. Development cost 2020 fleet size target: 250+ 2016 2017 2018 2019 2020 Targeted C Series de
Slide 37: Free cash flow objective
Free cash flow objective Return to positive FCF in 2018 [$US] Targeted cash flow from operations Targeted investments Free cash flow targets © Bombardier Inc. or its subsidiaries. All rights reserved. Takeaways and targets § Positive FCF generation in 2018 § Future investments in line with D&A § FCF
Slide 38: In summary
In summary Strengthening financial flexibility and creating shareholder value § Generate $25B+ 2020 revenue Revenue growth § Solid transportation backlog target § C Series rebuilds our commercial franchise § Global 7000 drives BBA growth © Bombardier Inc. or its subsidiaries. All rights reserved. EB
Slide 39: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 40: Business Aircraft overview
Business Aircraft overview A world-class franchise § Steady growth in a mature market © Bombardier Inc. or its subsidiaries. All rights reserved. § Leadership position § Focus on improving profitability § Right team on the ground § Decisive actions implemented ü Global 6000 rate change ü Learjet 85
Slide 41: Business Aircraft market outlook
Business Aircraft market outlook Solid growth across all business segments Industry revenue market forecast Industry highlights [$USB, 2014-2020] § Business Aircraft CAGR © Bombardier Inc. or its subsidiaries. All rights reserved. market set to grow +5% 5% annually 28 § Bombardier has 21 15 leading
Slide 42: 2016 market forecasts
2016 market forecasts 2016 likely to remain challenging Industry market forecasts [Units, 2016 Forecast] -3% -12% © Bombardier Inc. or its subsidiaries. All rights reserved. -12% 847 ~800 ~775 788 744 696 Nov 2014 Nov 2015 Jan 2015 Nov 2015 Mar 2015 Nov 2015 We were early in identifying a bearish tr
Slide 43: Business Aircraft product portfolio
Business Aircraft product portfolio Industry-leading portfolio Category BBA Products Market Share1 GLOBAL 7000 Only In development; EIS 2018 Offering © Bombardier Inc. or its subsidiaries. All rights reserved. LARGE GLOBAL 5000/6000 Upgraded in 2012 42% CHALLENGER 650 Upgraded in 2015 47% MEDIUM CHA
Slide 44: Business Aircraft revenue growth target
Business Aircraft revenue growth target Global aircraft expected to lead growth in coming years Targeted revenues [$US, 2015-2020] Global Learjet, Challenger, Customer Services © Bombardier Inc. or its subsidiaries. All rights reserved. CAGR target +16% 2015 2016 2017 2018 2019 2020 43 Please refer
Slide 45: Focus on Global 5000/6000
Focus on Global 5000/6000 Numerous competitive advantages Global 5000/6000 attributes1 § Most delivered aircraft family in large segment for the past 10 years § Class-leading aircraft © Bombardier Inc. or its subsidiaries. All rights reserved. – Biggest cabin – Fastest cruise speed (5 speed records
Slide 46: The segment-defining Global 7000
The segment-defining Global 7000 Defining the new standard in the large category Global 7000 © Bombardier Inc. or its subsidiaries. All rights reserved. EXCEPTIONAL BREAKTHROUGH HIGH SPEED LOW SPEED INTERIOR AIRCRAFT HANDLING First and only business jet Exceptionally fast with a Unique steep approac
Slide 47: Global 7000 development
Global 7000 development Disciplined program execution Underway Underway Underway Underway © Bombardier Inc. or its subsidiaries. All rights reserved. Expected entry into service 2nd half of 2018 Flight validation System level testing Accelerated component testing Customer validation Flight Test Vehi
Slide 48: Business Aircraft EBIT improvement roadmap
Business Aircraft EBIT improvement roadmap Clear steps to address business performance issues EBIT target with potential sources of change [$US, 2015-2020] © Bombardier Inc. or its subsidiaries. All rights reserved. 2015 2016 Global Revenue Business Operational 2020 baseline 5000/6000 conversion mod
Slide 49: Business model enhancements
Business model enhancements Addressing gap to peer performance Leverage production rate reset Grow customer services § Rebalance supply and demand § High-margin activity © Bombardier Inc. or its subsidiaries. All rights reserved. § Capitalize on Global premium brand § Very large installed base § Str
Slide 50: Key transformation initiatives
Key transformation initiatives Significant opportunities to improve EBIT and FCF Deploy densification § Move to more balanced working shifts § Fewer aircraft in Work-in-Process inventory due to fewer weeks spent on assembly line © Bombardier Inc. or its subsidiaries. All rights reserved. § Optimize
Slide 51: Conclusion
Conclusion We are the industry leader in terms We have the broadest product of delivery market share, installed portfolio2 that is being refreshed base1 and backlog with class-leading products © Bombardier Inc. or its subsidiaries. All rights reserved. $ The ongoing transformation plan and We have
Slide 52: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 53: Commercial aircraft overview
Commercial aircraft overview C Series expected to drive BCA growth building off strong CRJ / Q400 base ▪ New senior leadership team from commercial aviation industry © Bombardier Inc. or its subsidiaries. All rights reserved. ▪ Strong incumbent market position and product advantages on CRJ / Q400 ▪
Slide 54: Strong incumbent market position
Strong incumbent market position Strong and established market position on current in-service programs Most successful regional jet Most capable turboprop © Bombardier Inc. or its subsidiaries. All rights reserved. Lowest cost for airlines Most profitable for airlines § Up to 10% COC advantage per s
Slide 55: Introducing the C Series
Introducing… © Bombardier Inc. or its subsidiaries. All rights reserved. ….the first 100% new narrowbody aircraft in over 30 years… 54 Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2 of this presentation
Slide 56: C Series: Program status
C Series : Program status Uniquely positioned and poised to ramp-up to profitability Aircraft program life cycle Introduce Grow Harvest Extend (or ramp down) ~5 years ~5 years ~20 years ~5 years © Bombardier Inc. or its subsidiaries. All rights reserved. Today Design & deliver class-leading aircraft
Slide 57: C Series: Airline economic value proposition
C Series : Airline economic value proposition Low trip and seat costs to create offensive and defensive network strategies Cash operating cost benefits Cost per Seat 100% New Re-engined C Series © Bombardier Inc. or its subsidiaries. All rights reserved. E190-E2 100-150 seats 150-200 seats - 8% E195
Slide 58: C Series: Overall value proposition for airlines
C Series : Overall value proposition for airlines Differentiated product and performance vs. legacy or re-engined programs 100% NEW AIRCRAFT UP TO 12,000 LBS LIGHTER © Bombardier Inc. or its subsidiaries. All rights reserved. 20% FUEL BURN ADVANTAGE 15% ADVANTAGE COC TRANSCON RANGE $13M NPV PER AIRC
Slide 59: C Series: Proven performance ahead of plan
C Series : Proven performance ahead of plan Program is being delivered ahead of brochure and competition Announced at the 2015 Paris Airshow © Bombardier Inc. or its subsidiaries. All rights reserved. Flight tests 100% complete 58 Source: Bombardier marketing. Please refer to our disclosure regardin
Slide 60: C Series: Large 100-150 seat narrowbody market
C Series : Large 100-150 seat narrowbody market Large market segment neglected by airlines due to available technology/aircraft 100-150 seat aircraft market1 Average monthly worldwide passengers per [units, 2014-2034] departure2 [2014] © Bombardier Inc. or its subsidiaries. All rights reserved. 3,30
Slide 61: C Series: Fair market share
C Series : Fair market share Focused sales efforts underway to secure incremental volume © Bombardier Inc. or its subsidiaries. All rights reserved. 100-150 seat market share success A319neo 9% 737 MAX 7 CS100 / CS300 12% 47% 32% 47% E190-E2 / E195-E2 Total of 519 orders 60 Sources: Firm order backl
Slide 62: Commercial Aircraft revenue growth target
Commercial Aircraft revenue growth target C Series is expected to drive BCA’s revenue growth Targeted revenues and C Series deliveries [$US; # of aircraft, 2015-2020] $5.5B+ © Bombardier Inc. or its subsidiaries. All rights reserved. C Series CRJ, Q400 and Services 2015 2016 2017 2018 2019 2020 Targ
Slide 63: Entry in Service experience
Entry in Service experience Extensive program, EIS, customer introduction and support experience Program experience Customer EIS and ongoing support © Bombardier Inc. or its subsidiaries. All rights reserved. 10 38 23 25 7 3 11 17 5 36 8 13 16 39 1 15 20 30 24 37 28 19 35 9 34 29 18 33 27 31 6 2 22
Slide 64: Commercial Aircraft EBIT improvement roadmap
Commercial Aircraft EBIT improvement roadmap Focusing on key levers to improve our performance EBIT target with potential sources of change [$US, 2015-2020] Key EBIT drivers § Secure stream of incremental © Bombardier Inc. or its subsidiaries. All rights reserved. orders to gain positive market mome
Slide 65: C Series: Disciplined program EIS / Ramp-up
C Series : Disciplined program EIS / Ramp-up Targeting US$2B investment to cash flow positive program Development & flight testing Completed © Bombardier Inc. or its subsidiaries. All rights reserved. Program certification Complete by EOY ‘15 Entry into service preparation On track and execution Pro
Slide 66: Entering the next narrowbody era
§ Proven technology and performance § Robust market and best in class product § Robust EIS plan in place § Order backlog to prime ramp-up § Clear roadmap to profitability © Bombardier Inc. or its subsidiaries. All rights reserved. § New leadership team with clear execution plan 65 Entering the next
Slide 67: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 68: Aerostructures & Engineering Services overview
Aerostructures & Engineering Services overview World-class Tier-1 capabilities § Focused on cost © Bombardier Inc. or its subsidiaries. All rights reserved. competitiveness § Track record of innovation § Aircraft-level integration experience 67 Please refer to our disclosure regarding forward-lookin
Slide 69: Capabilities and footprint
Capabilities and footprint World-class capabilities and global centres of excellence Capabilities and expertise Manufacturing footprint Design, Manufacturing & Aftermarket for Primary Structures © Bombardier Inc. or its subsidiaries. All rights reserved. Engine Nacelles High-Tech Composite Complex M
Slide 70: BAES revenue growth target
BAES revenue growth target 8% annual growth target driven by new platforms Targeted revenues [$US, 2015-2020] CAGR target $2.5B+ +8% © Bombardier Inc. or its subsidiaries. All rights reserved. 2015 2016 2017 2018 2019 2020 69 Please refer to our disclosure regarding forward-looking statements and as
Slide 71: BAES EBIT improvement roadmap
BAES EBIT improvement roadmap Transformation is key to achieve margin objectives EBIT target with potential sources of change [$US, 2015-2020] © Bombardier Inc. or its subsidiaries. All rights reserved. 2015 Revenue 1 Cost reduction 3 Optimize R&D, 2020 baseline conversion through procurement manufa
Slide 72: Key transformation initiatives
Key transformation initiatives We have a solid plan in place Initiative overview Results 1 Procurement cost reduction Example of selected § Execute detailed commodity strategies commodities § Leverage lower cost geographies § Composite, Fabricated Metal Parts, Hardware & Electrical © Bombardier Inc.
Slide 73: In summary
In summary World-class Tier 1 capabilities Vision for 2020 Priorities ▪ Contribute to BBD’s overall competitiveness ▪ Optimize business segment cost structure via – Procurement cost savings and labor efficiency ▪ Position Aerostructures & Engineering © Bombardier Inc. or its subsidiaries. All rights
Slide 74: Investor Day 2015 Agenda
Investor Day 2015 Agenda Topic Presenter Time Breakfast and registration 07:30 am 1§ Strategic Roadmap Alain Bellemare 08:00 am President and Chief Executive Officer 2§ Enterprise Operational Jim Vounassis © Bombardier Inc. or its subsidiaries. All rights reserved. Transformation Chief Transformatio
Slide 75: Bombardier Transportation business overview
Bombardier Transportation business overview BT is transforming for profitable growth in an attractive rail market 1. Resilient market with © Bombardier Inc. or its subsidiaries. All rights reserved. steady growth 2. Leading position in the market 3. Transformation strategy to further grow profitabil
Slide 76: Solid growth for rail industry expected
Solid growth for rail industry expected Strong underlying sector trends Total annual average rail market1 vs. global GDP growth Key facts [€B, %, 2005-2019] § Crisis resilient capital Total rail market (€B) goods market globally Global GDP growth (%) €176B © Bombardier Inc. or its subsidiaries. All
Slide 77: Highest growth expected in services and systems
Highest growth expected in services and systems Rolling stock expected to remain largest segment and Europe largest region Annual BT target market1 [€B, 3-year average, 2011-2019] By product segment By geographical region Total CAGR Total CAGR 2011-13 – 2011-13 – 2017E-19E 2017E-19E © Bombardier Inc
Slide 78: BT is expanding its global presence
BT is expanding its global presence… We have secured key strategic orders worldwide against key competitors 15 CRH380D for 62 TRAXX Locomotives China Railways for Israel Railways €339M (2015)1 €230M (2015) 30 years maintenance 42 R2N regional trains on FLEXITY for Toronto for SNCF €282M (2015) €397M
Slide 79: Confirming its market leadership
… confirming its market leadership We have the broadest portfolio of rail solutions globally Global Rolling Stock market1 Europe1 North America 1,2 Asia-Pacific excl. China1 BT ~ 22% Others #1 Others BT ~32% BT ~38% Others Others Competitor #2 BT ~18% © Bombardier Inc. or its subsidiaries. All right
Slide 80: BT revenue growth target
BT revenue growth target Strong backlog and potential from new contracts Actual and targeted revenues [€, 2012-2020] Revenues from backlog Revenues from new contracts €9.5B+ target ($10B+) © Bombardier Inc. or its subsidiaries. All rights reserved. 2012 2013 2014 2015 2016 2017 2018 2019 2020 BT tar
Slide 81: BT EBIT improvement roadmap
BT EBIT improvement roadmap BT intends to grow its profitability based on three key pillars EBIT target with potential sources of change [$US, 2015-2020] © Bombardier Inc. or its subsidiaries. All rights reserved. A B C 2015 Revenue Business model OneBT R&D Competitive 2020 baseline conversion enhan
Slide 82: Revenue conversion
A Revenue conversion BT top-line growth is supported by strong backlog and future bid pipeline Key facts Examples of value-based orders § Strong bid pipeline with large projects in all segments and geographies C30 Stockholm © Bombardier Inc. or its subsidiaries. All rights reserved. § Differentiatio
Slide 83: Business model enhancements: revenue mix
B Business model enhancements Better revenue mix to drive profitability Increasing Services revenue contribution today… 2020 target 14% 18% 15%1 © Bombardier Inc. or its subsidiaries. All rights reserved. 71% 65% 17%1 25% 2010 2014 … and the future is already visible in backlog 55% Rolling Stock2 29
Slide 84: Business model enhancements: selective bidding
B Business model enhancements More selective bidding and diversification 2010 2014 11% 12% Continental 27% UK Europe1 Continental Rolling Europe1 North © Bombardier Inc. or its subsidiaries. All rights reserved. stock 18% South Africa 25% America orders Australia by Others North region 64% America 2
Slide 85: Business model enhancements: margin on backlog
B Business model enhancements Margin on backlog targeted to improve as share of lower margin projects reduces Targeted contribution of projects with gross margin < 5% Key facts and [% of annual forecasted sales, 2015-2020] targets 27% § Margin drop in 2012-14 due to legacy projects © Bombardier Inc.
Slide 86: OneBT transformation
C OneBT transformation Organizational framework to improve margins in place Selective bidding Increasing Centralizing global process standardization supply chain Strategic panel suppliers © Bombardier Inc. or its subsidiaries. All rights reserved. Other panel suppliers Non-panel suppliers Stronger o
Slide 87: OneBT transformation: new bid process
C OneBT transformation New bid process designed to increase profitability Tender bidding process Marketing Pre-bid Bid finalisation Negotiation © Bombardier Inc. or its subsidiaries. All rights reserved. § Bid strategy § Execute § Bid summary “Blue § Continuous feedback (“capture plan”) "capture pla
Slide 88: Higher share of orders from existing platforms
C OneBT transformation Higher share of orders from existing platforms 2010 2014 2015/16 © Bombardier Inc. or its subsidiaries. All rights reserved. Orders 44% based on options, 83% 85% call-offs, existing platforms Based on existing products New developments TRAXX FLEXITY AVENTRA 87 Please refer to
Slide 89: Product standardization
C OneBT transformation Product standardization will reduce complexity and lead times Way forward: Product portfolio convergence targets (number of platforms) Single deck Double deck Metro 20 © Bombardier Inc. or its subsidiaries. All rights reserved. 15 10 9 8 6 Current 2020 Current 2020 Current 202
Slide 90: Strategic partnerships with core panel suppliers
C OneBT transformation Strategic partnerships with core panel suppliers to streamline execution Number of total suppliers [2012, 2014, 2020 target] Key facts ~37,000 § Strategic partnerships to optimize costs, reduce risks © Bombardier Inc. or its subsidiaries. All rights reserved. § One A and two B
Slide 91: A more efficient organization
C OneBT transformation A more efficient organization in place allowing faster decision making Total number of layers, allocation of Project Managers 2014 n 2015 n n-1 n-1 n-2 n-2 © Bombardier Inc. or its subsidiaries. All rights reserved. n-3 n-3 n-4 PM n-4 n-5 n-5 n-6 n-6 n-7 Avg. span of control,
Slide 92: In summary
In summary A clear strategy in place to drive profitable growth Current priorities § Focus on OneBT transformation to achieve EBIT and cash targets © Bombardier Inc. or its subsidiaries. All rights reserved. § Secure key strategic orders to maintain market leadership § Enhancing the business model f
Slide 93: Q&A
© Bombardier Inc. or its subsidiaries. All rights reserved. ? Q&A Please refer to our disclosure regarding forward-looking statements and assumptions on pages 1 and 2 of this presentation