Power 2020 G. Lescuyer, CEO. Civil Electronics Division I. Carmi. Industrial Standby Division F. Cecchi. Space & Defence Division A.

Transcription

1 Investor Presentation - November 16, 2015

2 Agenda 14h30-15h00 Welcome coffee 15h00-15h45 Power 2020 G. Lescuyer, CEO 15h45-16h00 Civil Electronics Division I. Carmi 16h00-16h15 Industrial Standby Division F. Cecchi 16h15-16h30 Space & Defence Division A. Sennet 16h30-16h45 Transportation, Telecom & Grid Division T. Alcide 16h45-17h00 Power 2020 targets G. Lescuyer, CEO & B. Dathis, CFO 17h00-17h30 Conclusion and Q&A G. Lescuyer, CEO 2

3 Investor Presentation, November 2015 Ghislain Lescuyer, CEO 3

4 Saft today SAFT DEVELOPS AND MANUFACTURES ADVANCED-TECHNOLOGY BATTERY SOLUTIONS FOR MULTIPLE APPLICATIONS ON A GLOBAL SCALE Diversified base of industries Broad portfolio of technologies (Ni-based, Primary Lithium and Lithium-ion) Leadership positions on 75-80% of revenue base (Industrial Standby, Metering, Aviation, Rail, Defence, Satellites) 35% North America 32% Europe 33% Asia, MEA, Latam ~100 years of history 678m revenue FY % invested in R&D 4,000 people 4

5 We serve multiple customer segments for specific applications FY2014, % of total sales Specialty Industrial Industrial Standby (24%) Civil Electronics (27%) Aviation (12%) Defence (7%) Rail (9%) Space (4%) Telco (8%) Other (9%) 5

6 Saft delivered a robust performance over the past 10 years Total revenue, m EBITDA, m 4.2% p.a. Constant % p.a. Current Sustained 4% growth p.a Resilient and stable EBITDA Cash Flows, m Dividend per share, Capex net of grants Free Cash Flow 93 Li-ion invest. period Exceptional dividend Strong operating cash flows Growing dividend

7 Macrotrends drive growth in the battery market MACROTRENDS Industrialization and urbanization in emerging economies Disruptive technologies Greater global interconnections Tension on resources and climate change Telecom network deployment Smart cities and houses programs Households equipment Development of autonomous energy (incl. vehicles) Increasing mobility and robotics Internet of Things Development of data centers Launch of new communication satellites New aircraft programs Development of renewables Increasing needs for energy efficiency Intensified grid management NEW APPLICATIONS and CHANGES in customer usages 7

8 Saft is focused on industrial applications requiring high performance and tailored solutions BATTERY MARKET BREAKDOWN AND GROWTH bn, 2014 worldwide CONSUMERS ~5% INDUSTRY ~6% High volumes Low market price Alkaline Lithium-ion Carbon-zinc bn 40 Limited differentiation for other industrial applications Lead-acid AUTOMOTIVE ~5% High volumes Unique application Lead-acid Lithium-ion emerging SAFT PRESENCE IN INDUSTRY & AUTOMOTIVE High performance and tailoring required for most specific applications Nickel-based Lithium Lithium-ion Silver Main characteristics of Saft s business model Tailored/ project based R&D Cost not the 1 st selection criteria in sourcing Small batch size in manufacturing High touch sales approach (proximity) ~X% Est growth Segment dynamics Main technology Source: Freedonia, Frost & Sullivan and Saft estimates. 8

9 Saft proposes a distinctive offer to its customers Key buying factors High performance Reliability and safety Continuous innovation Long-term relationships Saft s answer Broad portfolio of technologies Robust products Tailored solutions Expertise and track record Ni-based Primary Li Li-ion High power Extreme operational conditions Customer proximity In-depth customer needs understanding Strong customer references Undisputed reputation Systems Long lifetime Agility/Flexibility Services 9

10 Recent successes validate Saft s positioning Key buying factors High performance Reliability and safety Continuous innovation Long-term relationships SETTING THE STANDARD FOR ADVANCED INDUSTRIES GEO Satellites OPENING NEW FRONTIERS Railway in emerging Asia PROVIDING SOLUTIONS TO FAST GROWING MARKETS Smart metering OPERATING SUCCESSFULLY IN HARSH CONDITIONS 3G/4G networks 10

11 New and higher customer expectations Battery market is made of multiple customer segments, applications and technologies The number of applications is increasing and customer usage are changing fast Their expectations in terms of performance, quality, time to market and costs are growing Customers increasingly need to differentiate They require joint innovation and long-term collaboration 11

12 Our plan to strengthen Saft s leadership position Focus to ensure profitable growth Differentiate through superior solutions for our customers Deliver with operational Excellence Organize to be customer centric, promote talents, better anticipate and control 12

13 Focus to ensure profitable growth FOCUSED STRATEGY CONTRIBUTION TO GROWTH BY 2019 AVIATION Airliners... RAIL Hybrid traction SPACE Satellites LEVERAGE POSITIONS SELECT APPLICATIONS TELCO Harsh conditions Data Center MARINE Hybrid propulsion ~65% ~35% CIVIL ELECTRONICS VEHICLES Metering Specialty ground Vehicles... Tracking INDUSTRIAL STANDBY GRID DEFENCE Weapon systems Torpedos ALIGNED EFFORTS Reinforce Key Account management to leverage existing successes Grow selectively in new applications Strengthen our presence in fast growing countries (e.g., India and China) 13

14 Differentiate through superior solutions for our customers Customer #1 Customer #2 Product characteristics Customer s requirements Saft s Know-How CHEMISTRY: Nickel, Primary Lithium, Lithium-ion (NCA, SLFP, NMC, LTO) CELLS: Cylindrical, Prismatic, Pouch Continuous Cost/ Performance ratio Safe Solutions Durability in Harsh Environment RESEARCH EXCELLENCE (TRL 1-4) DEVELOPMENT EXCELLENCE (TRL 5-9) SYSTEMS Cycling vs. Stand By 1 MANUFACTURING EXCELLENCE High Voltage vs. Low Voltage Specific Power Long Cycle Life SALES EXCELLENCE OPERATIONS: Cell Manufacturing and System Assembly Customized Battery Management Systems SERVICES 14

15 Deliver with operational Excellence Expected results at the end of 2019 Upgrade system development organisation and processes Reduce costs of purchased material Strengthen World Class manufacturing Excellence Improve supply chain management Optimize portfolio management Upgrade project management skills Implement end-toend management Further consolidate suppliers Streamline material specifications Increase supplier base from LCC Enforce continuous productivity improvement and optimize fixed costs Leverage best practices across divisions Optimize inventory level Simplify flows Be local when required Systematically reviewing make or buy options 5-7% of R&D efficiency (to be redeployed to fuel innovation) 4-5% of reduction in costs of material 5-6% of reduction in total costs of manufacturing 2% of sales (as reduction in Operating Working Capital) 15

16 Guiding principles for new organization as of January 1 st Clear customer focus Full authority, accountability and responsibility of P&Ls for Executive VPs (division s heads) Best practices and economies of scale leveraged across divisions Develop capabilities, foster mobility and promote talents Better visibility and control Long Term Incentive Plan (LTIP) in line with shareholder value creation objectives 16

17 A new Saft organisation 1 to better focus on business priorities CEO G. Lescuyer Finance & M&A - B. Dathis Human Resources - P-Y. Tilly Communication Civil Electronics I. Carmi Industrial Standby F. Cecchi Space & Defence A. Sennet Transportation, Telecom & Grid T. Alcide Growth Innovation New investment ramp-up Emerging markets Lead-acid substitution Margin protection Customer relationships Innovation New applications Focus, innovation & differentiation Improved development Profitability improvement FY2014 revenue: 217m 171m 64m 226m Technology: corporate research, integrated roadmap, technology bricks K. Nechev Operations & Transformation: World Class manufacturing, sourcing, transformation management Business Development & Sales: key account management, regional coordination G. Bowling 1 Subject to information/ consultation of employee representatives 17

18 Investor Presentation, November 2015 Civil Electronics Igal Carmi 18

19 Market overview: Civil Electronics Market size (basis 100 in 2011) X% CAGR Main drivers and assumptions +5% Civil Electronics +5% Utility investment in smart metering growing in Water, Gas and Electricity (esp. in Europe and China) Favorable regulations beginning in Europe (e.g., e-call) Development of new applications (e.g., extended tracking, Internet of Things)

20 Business priorities: Civil Electronics Grow in metering, e-call and tracking Focus Continue to invest in more production and closer to end-markets Continue to explore the Internet of Things for specific niche applications requiring demanding products Improve performance of legacy primary products to maintain leadership Differentiate Expand high temperature range for oil drilling Scale up new technologies production (e.g., LiMnO2) Implement World class technics to maintain high quality of our products Deliver Continue to closely manage cost structure to keep a high level of margins 20

21 Investor Presentation, November 2015 Industrial Standby Franck Cecchi 21

22 Market overview: Industrial Standby Market size (basis 100 in 2011) X% CAGR Main drivers and assumptions % % 120 Sustained industrialization of emerging countries Industrial Standby Increase in global electricity demand Beginning of substitution of Lead by Li-Ion

23 Business priorities: Industrial Standby Focus Strengthen leadership with existing clients Reinforce presence close to end-customers Accompany our customers in their geographical/localization strategy Take over some Lead markets with new Li-Ion product Differentiate Enforce tailoring and innovation for harsh environment through Continuous improvement Increased life duration and further TCO improvement Enhance new Li-Ion product performance Deliver Increase share of sourcing from LCC Streamline production processes Reinforce Industrial footprint 23

24 Investor Presentation, November 2015 Space & Defence Annie Sennet 24

25 Market overview: Space & Defence Market size (basis 100 in 2011) X% CAGR Main drivers and assumptions Space % +1% Stable and visible slow market growth Cyclic yet increasing demand for GEO communications/larger satellites Targeted growth in LEO applications Defence 100-5% 80 +3% 90 Traditional torpedo and missile business driven by replacement cycles Highs and lows expected depending the cycle New Defence & Marine systems +3% +4% Military aviation Adoption of higher environmental standards by Europe forcing the hybridization of ships and boats New applications in the Army (e.g., conversion of ground vehicles to Li-ion, Directed Energy, remote power for camps) 25

26 Business priorities: Space & Defence Maintain long term relationships to continue to have access to long term contracts and funded programs (e.g., Boeing, LM, US Navy, GE, DCNS, TKMS) Focus Leverage defense products & technologies into non-defense markets (e.g., X6T) Develop customized Li-ion products for new segments (e.g., Marine, Submarine, Special Ground Vehicles, military Aviation) Continue innovation in very high power technology to reinforce leadership Differentiate Drive to enhance our product performance for all segments Develop very safe, high energy, very low power products for submarines Continue to be the technology leader in space cells Strengthen application and technical support to improve speed to market Deliver Continue enhance production capabilities to remain competitive Strategically place capital investments ahead of demand 26

27 Investor Presentation, November 2015 Transportation, Telecom & Grid Tom Alcide 27

28 Market overview: Transportation, Telecom & Grid Market size (basis 100 in 2011) X% CAGR Main drivers and assumptions Civil Aviation +10% +6% Growth of air traffic and fleet size Need for increased battery capacity Transition to Li-ion Ground Tranportation % +6% Infrastructure in emerging countries (e.g., light rail) Need for increased battery capacity Emerging applications (e.g., hybridization) Transition to Li-ion at the expense of Lead Telecom & Grid +29% +24% Increased number of connections Densification of existing Telco infrastructure Development of Data Centers Substitution of Lead by Li-ion Installed wind and solar capacity growth 1 Including Rail, Specialty vehicles (e.g., forklifts) 28

29 Business priorities: Transportation, Telecom & Grid Focus Leverage existing relationships in our core segments to (i) keep growing our traditional business and (ii) accompany our customers in the transition to new technology (in particular Li-ion) Leverage our successes in Li-ion (e.g., space) to develop new customers/ applications with differentiated solutions Differentiate Develop solutions for niche applications for which mass produced solutions cannot meet the need Find, develop and exploit characteristics of technology (e.g., Ni-Cd and Li-ion) to differentiate Deliver Bring better value for Saft and the customers by: Reengineering product development organisation and processes to be more customer centric Systematizing make or buy on all aspects of business Optimizing manufacturing 29

30 Investor Presentation, November 2015 Power 2020 targets Ghislain Lescuyer, CEO Bruno Dathis, CFO 30

31 Power 2020 targets Above 900m revenue in 2019 EBITDA margin above 16% in 2019 Operations Capex around 5-6% of sales over the period Average FCF to EBITDA around 40% over the period Selective M&As Capital allocation Pay-out ratio between 40-50% Share buyback program up to 60m 31

32 Revenue growth m > Expected contribution to growth over the period #1 - Transportation, Telecom & Grid #2 - Civil Electronics #3 - Space & Defence #4 - Industrial Standby at 2015 exchange rate

33 EBITDA margin bridge % of revenue INTERNAL EXTERNAL ~1.5% ~1.5% ~2.5% >16% 14.5% ~-4.0% 2015 Est. Volume growth net of fixed cost increase Reduce costs of purchased materials Strengthen World Class Manufacturing Excellence Price erosion

34 Capex and Free Cash Flows Capex As a % of revenue Free Cash Flows As a % of EBITDA 7% 39% ~40% 5% 5-6% 22% Li-ion invest. period Li-ion invest. period 50% maintenance & mandatory investments 50% new products, additional production capacity & productivity Improved margins Broadly stable Capex Improved Working Capital discipline 34

35 Sharing value creation with our shareholders Dividends Payout ratio of 40-50% over the period Share buyback Up to 60m Over the next 12 months 35

36 M&A and partnerships Technology Partnerships Geographic moves Targeted acquisitions 36

37 Investor Presentation, November 2015 Conclusion Ghislain Lescuyer, CEO 37

38 Conclusion Focus Differentiate Deliver Increased profits Return to shareholders Organize 38

39 Q&A 39

40 Appendix - Evolution of the reporting structure From IBG Transportation Industrial Vehicles & Formula 1 Rail Aviation Stationary Telecom ESS Industrial Standby SBG Civil Electronics Space & Defence Traditional Defence New Defence & Marine systems Space To Civil Electronics Industrial Standby Space & Defence Traditional Defence (including military aviation) New Defence & Marine li-ion systems Space High Performance Racing Transportation, Telecom & Grid Industrial Vehicles Rail Civil Aviation Telecom & Grid 40