Thales Sa · EURONEXT:HO
Thales Sa — FY2008 Earnings Presentation
47 slides from Thales Sa's earnings presentation, Feb 26, 2009
Slide 1: Full Year 2008 Review
Full Year 2008 Review Denis Ranque Patrice Durand Chairman & CEO CFO 26 February 2009
Slide 2: Full Year 2008 Financials
Full Year 2008 Financials Patrice Durand CFO 26 February 2009
Slide 3: Agenda
Agenda 1. FY08 Financial Highlights 2. Orders, Revenues and Results 3. Cash Flow and Financial Situation 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 regard
Slide 4: FY08 Financial Highlights
1. FY08 Financial Highlights 2. Orders, Revenues and Results 3. Cash Flow and Financial Situation 4
Slide 5: FY2008 summary
FY2008 summary Orders: +14%(*) – strong, diversified, at record levels Revenues: +8%(*) – higher than targeted Profitability sustained in a turbulent economic environment despite difficulties on certain programmes … notwithstanding a still very strong euro Thales well positioned in an uncertain envi
Slide 6: FY08 financial overview
FY08 financial overview in €m 2008 2007 change restated (**) total organic Order intake 14,298 13,024 +10% +14% Order book at year-end 22,938 22,675 +1% +6% Revenues 12,665 12,504 +1% +8% EBIT (*) 877 857 +2% +15% in % of revenues 6.9% 6.9% +7 bps +41 bps Net income (Group share) (*) 650 1,008 -35%
Slide 7: Orders: a well balanced portfolio
Orders: a well balanced portfolio Order intake by destination Order intake by segment RoW 9% France Middle East 19% Security Aerospace & 6% 25% Space 29% Asia 10% Australia UK 4% 19% N Am erica 9% Defence 46% Rest of Europe 24% 7
Slide 8: Diversified revenues
Diversified revenues Revenues by destination Revenues by segment RoW Middle East 5% Security 9% France 24% Aerospace & 25% Space Asia 33% 9% Australia 5% UK N Am erica 12% 9% Defence Rest of 43% Europe 26% 8
Slide 9: Aerospace & Space: FY08 financial overview
Aerospace & Space: FY08 financial overview in €m 2008 2007 change restated total organic Order intake 4,184 4,182 +0% +2% Order book at year-end 7,020 7,222 -3% +1% in months of revenues 20 months 23 months Revenues 4,141 3,789 +9% +14% EBIT 203 237 -14% +10% in % of revenues 4.9% 6.3% -135 bps -18
Slide 10: Aerospace & Space: Focus on Aerospace
Aerospace & Space: Focus on Aerospace in €m 2008 2007 change restated total organic Order intake 2,826 2,659 +6% +10% Order book at year-end 5,039 5,127 -2% +4% in months of revenues 23 months 24 months Revenues 2,668 2,515 +6% +12% EBIT 124 190 -35% -21% in % of revenues 4.6% 7.6% -291 bps -197 bps
Slide 11: Aerospace & Space: Focus on Space
Aerospace & Space: Focus on Space in €m 2008 2007 change restated total organic Order intake 1,358 1,523 -11% -11% Order book at year-end 1,981 2,095 -5% +0% in months of revenues 16 months 20 months Revenues 1,473 1,274 +16% +18% EBIT 78 46 +70% +189% in % of revenues 5.3% 3.6% +168 bps +313 bps 11
Slide 12: Defence: FY08 financial overview
Defence: FY08 financial overview in €m 2008 2007 change restated total organic Order intake 6,511 5,467 +19% +23% Order book at year-end 10,800 10,406 +4% +9% in months of revenues 24 months 24 months Revenues 5,447 5,186 +5% +9% EBIT 532 424 +25% +28% in % of revenues 9.8% 8.2% +159 bps +141 bps Ex
Slide 13: Security: FY08 financial overview
Security: FY08 financial overview in €m 2008 2007 change restated total organic Order intake 3,536 3,077 +15% +16% Order book at year-end 5,080 4,987 +2% +9% in months of revenues 20 months 19 months Revenues 2,990 3,131 -5% -2% EBIT 159 198 -20% -17% in % of revenues 5.3% 6.3% -101 bps -94 bps Grow
Slide 14: Orders, Revenues and Results
1. FY08 Financial Highlights 2. Orders, Revenues and Results 3. Cash Flow and Financial Situation 14
Slide 15: Record order intake in 2008
Record order intake in 2008 Book to bill: 1.04 Book to bill: 1.13 in €m +14% Total : 14 298 organic Total : 13 024 2,412 CVF aircraft carrier (UK) 629 1,092 FSTA refuelling aircraft (UK) 326 JNUP London Underground (UK) >270 ADAPT air defence systems (UK) >210 Rail North Bypass (Algeria) 200 Levante
Slide 16: An increasing order book
An increasing order book in €m +6% 22 675 22 938 +1417 +126 -71 22% 22% -1209 46% 47% 32% 31% 2007 2008 2007 Order Acquisitions Disposals Exchange Organic 2008 Order book impact grow th book Aerospace / Space Defence Security FX impact: –1,2bn € 16
Slide 17: Revenues: strong organic growth
Revenues: strong organic growth in €m +8% +938 12 665 +81 +208 12 296 -339 -519 2007 Q1 Space Acquisitions Disposals Exchange Organic 2008 Revenues impact growth Revenues (published) Strong organic growth – FX headwind 17
Slide 18: Revenue growth by segment
Revenue growth by segment 2007 change in €m 2008 restated total organic Aerospace & Space 4,141 3,789 +9% +14% Defence 5,447 5,186 +5% +9% Security 2,990 3,131 -5% -2% Other and divested businesses 87 398 Total 12,665 12,504 +1% +8% 18
Slide 19: EBIT margin sustained
EBIT margin sustained in €m 2008 2007 change restated (*) total organic Revenues 12,665 12,504 +1% +8% Gross Margin 2,760 2,818 -2% +5% in % of revenues 21.8% 22.5% Indirect costs (1,850) (1,881) -2% +4% in % of revenues 14.6% 15.0% -44 bps -52 bps o/w R&D expenses (440) (451) -2% +4% in % of revenu
Slide 20: EBIT levels sustained
EBIT levels sustained in €m +15% +12 +113 877 858 -31 -74 2007 EBIT Acquisitions Disposals Exchange Organic growth 2008 EBIT (restated) impact 20
Slide 21: Self-funded R&D
Self-funded R&D in €m 2008 2007 change restated total organic P&L expense 440 451 -2% +4% Capitalised R&D 129 141 -9% -9% Total R&D funding 569 592 -4% +1% Impact of capitalisation on the P&L 2007 in €m 2008 restated Capitalised R&D 129 141 Amortisation charge (56) (52) Net impact on EBIT 73 89 Net
Slide 22: Net income
Net income 2007 in €m 2008 restated EBIT 877 857 Impairment of non-current operating assets (69) (96) Net capital gains 35 432 Income of operating activities 843 1,193 Cost of net financial debt (52) (45) Other financial results (50) (34) Other components of pension charges (11) 65 Income tax (145)
Slide 23: Cash Flow and Financial Situation
1. FY08 Financial Highlights 2. Orders, Revenues and Results 3. Cash Flow and Financial Situation 23
Slide 24: Free operating cash flow
Free operating cash flow 2007 in €m 2008 restated Operating cash flow 1,135 1,102 Change in WCR & contigency reserves (44) 24 Payment of pension benefits (111) (98) Income tax paid (80) (56) Net operating cash flow 900 972 Net operating investments (523) (512) o/w capitalised R&D (129) (141) Free op
Slide 25: Net cash flow – Net Debt
Net cash flow – Net Debt 2007 in €m 2008 restated Free operating cash flow 377 460 Net (acquisitions) / disposals (84) (660) Payment of UK defined benefits schemes (79) (70) Dividends (195) (169) Net cash flow 19 (439) in €m Net debt - 31 December 2007 (291) Net cash flow 19 Acquisition of treasury
Slide 26: A strong balance sheet
A strong balance sheet in €m 3881 3949 Gearing = Net debt / (Net equity+Net debt) = 10% 456 291 31.12.07 31.12.08 Net equity Net debt Low debt levels and strong liquidity 26
Slide 27: Pension obligations
Pension obligations 2007 in €m 2008 restated Externally-funded UK (297) (136) Netherlands (23) (51) Total (320) (187) Mainly internally-funded France (456) (376) Others (255) (233) Total (711) (609) Total unfunded status before tax (1,031) (796) Gross obligations UK (1,801) (2,461) Netherlands (619)
Slide 28: Strategy and outlook
Strategy and outlook Denis Ranque Chairman & CEO 26 February 2009
Slide 29: Well positioned in an uncertain environment
Well positioned in an uncertain environment Faced with several major challenges at the same time… Financial and credit crisis Dollar and sterling exchange rates Economic crisis … Thales has key strengths Strong balance sheet, very low level of debt Limited and well hedged exposure to dollar risk Sol
Slide 30: Solid customer base
Solid customer base Approximately 75% of our customers are defence/ government and public infrastructure operators Low exposure to civil aerospace (10%) •Enterprise •Civil • & Industry aerospace 5% 10% •Infrastructure •Operators •(with 15% in the public sector) 25% 60% •Defence & Government ~75% 30
Slide 31: Positioned in growth markets
Positioned in growth markets Defence France: favourable developments for Thales White Paper: defence-security continuum; surveillance and intelligence, particularly space- based; cyber-defence, etc. Defence Programming Law: increased procurement budgets and stimulus plan Central role of Thales in ne
Slide 32: Strong order book, good visibility
Strong order book, good visibility Exceptional order intake in 2008 €14.3 billion; +14% organic growth Strong order intake maintained in Q4 2008 +3% organic growth over previous record set in Q4 2007 Several major successes: London Underground (JNUP) Air defence UK (ADAPT) Rail North bypass Algeria
Slide 33: Consolidation of our geographic positions
Consolidation of our geographic positions Reaching full potential in our domestic markets France: €2,660m in new orders in 2008 Involvement in all major defence programmes (Rafale, FREMM, Barracuda...) and growth segments (intelligence, observation, information system security) Space: key partner of
Slide 34: Consolidation of our geographic positions
Consolidation of our geographic positions Benefiting from new opportunities on major export programmes On platforms Combat aircraft: Mirage/Rafale opportunities in India (upgrade of 51 Mirage) UAE (up to 60 Rafale), Libya, Brazil… Naval: success in Morocco with FREMM and corvettes, FREMM opportunity
Slide 35: A growth and investment strategy
A growth and investment strategy Increased investment in 2009 Consolidate order book Sustain long-term visibility Pursue worldwide marketing & sales efforts Stronger commercial presence in Middle East, Asia, Russia and Latin America Dynamic industrial partnership policy in India, Brazil, Mexico and
Slide 36: Combining vigilance and flexibility
… combining vigilance and flexibility Vigilance Closer tracking of customers (orders-to-intake pipeline) and project financing: optimise sales development High level of recruitment – adjustable to the overall economic activity Optimum 2011 Quality of customer bids and programme management Control of
Slide 37: Outlook for 2009
Outlook for 2009 Revenues organic growth between 3 and 5% Target an order book close to 2 years of revenues increased R&D investment unchanged marketing & sales efforts Remain competitive in an uncertain environment improve programme execution (Optimum 2011) restructuring costs assumption of ≈ 75 bp
Slide 38: Back-up
- - Back-up THALES
Slide 39: PPA impact
PPA impact in €m 2008 PPA 2008 before PPA (*) impact published Order intake 14,298 14,298 Order book at year-end 22,938 22,938 Revenues 12,665 12,665 EBIT 877 (125) 752 in % of revenues 6.9% -99 bps 5.9% Net income (Group share) 650 (90) 560 per share in € 3.31 (0.50) 2.82 (*) PPA: Purchase Price Al
Slide 40: FY07 restated vs. FY07 published
FY07 restated vs. FY07 published in €m 2007 Q1 2007 restated Space published Order intake 13,024 168 12,856 Revenues 12,504 208 12,296 EBIT 857 (1) 858 in % of revenues 6.9% 7.0% 40
Slide 41: Order intake by destination
Order intake by destination Order intake by destination 1,313 m € 2,660 m € 906 m € 1,447 m € 585 m € 2,755 m € 1,223 m € 3,409 m € France UK Rest of Europe N America Australia Asia Middle East RoW 41
Slide 42: Revenues by destination
Revenues by destination Revenues by destination 608 m € 1,134 m € 3,165 m € 1,139 m € 571 m € 1,190 m € 1,556 m € 3,302 m € France UK Rest of Europe N America Australia Asia Middle East RoW 42
Slide 43: Order book by destination
Order book by destination Order book by destination 1,464 m € 2,125 m € 5,795 m € 2,198 m € 665 m € 1,243 m € 3,841 m € 5,607 m € France UK Rest of Europe N Am erica Australia Asia Middle East RoW 43
Slide 44: Main programmes in order book
Main programmes in order book €m FSAF (France/Italy) 712 Fremm frigates (France/Italy) 647 IFS programmes 551 London Underground signalling - JNUP (UK) 539 Rafale (France) 534 CVF aircraft carrier (UK) 447 Watchkeeper (UK) 423 Yahsat satellite system (UAE) 362 Syracuse III satellite system (France)
Slide 45: Q4 2008 Orders by segment
Q4 2008 Orders by segment change in €m Q4 2008 Q4 2007 total organic Aerospace & Space 1,478 1,887 -22% -20% Defence 2,391 2,276 +5% +10% Security 1,353 1,065 +27% +28% Other and divested businesses 16 57 Total 5,238 5,285 -1% +3% 45
Slide 46: Q4 revenues by segment
Q4 revenues by segment change in €m Q4 2008 Q4 2007 total organic Aerospace & Space 1,511 1,309 +15% +19% Defence 1,882 1,725 +9% +13% Security 947 1,011 -6% -4% Other and divested businesses 22 64 Total 4,362 4,109 +6% +11% 46
Slide 47: DCNS key figures
DCNS key figures in €m 2008 (*) 2007 (*) change Order intake 2,329 1,862 +25% Revenues 2,522 2,821 -11% EBIT 152 171 -11% in % of revenues 6.0% 6.1% -3bps Net income 179 180 -1% (*) before PPA (Purchase Price Allocation) impact 47