Plaisir, October 30, 2017 – The Supervisory Board of Zodiac Aerospace Group met on October 30, 2017 and approved the financial statements for fiscal year 2016/2017 (September to August).
Yann Delabrière, CEO, said, “The good performance achieved in the second half shows that the industrial recovery and transformation of Zodiac Aerospace Group are under way. With the commitment of all Group employees, this momentum will continue in order to reach a sustainable performance level, in terms of both customer satisfaction and finances. Zodiac Aerospace is confident about the next stages of its development.”
SALES REVENUE AND CURRENT OPERATING INCOME1
| In millions of euros* | 2016/2017 | 2015/2016 | % change |
| Sales revenue | 5,127.1 | 5,208.2 | -1.6% |
| Current Operating Income | 217.6 | 269.5 | -19.3% |
| COI/REV | 4.2% | 5.2% | 0.0% |
| Net income attributable to equity holders of the parent | 73.4 | 108.1 | -32.1% |
| Net income | 82.4 | 165.7 | -50.3% |
| Earnings per share attributable to equity holders of the parent (€) | 0.25 | 0.38 | -35.6% |
| Earnings per share (€) | 0.28 | 0.59 | -53.0% |
| Net debt | 846.6 | 1,056.9 | -19.9% |
| Debt-to-equity ratio (x) | 0.27 | 0.34 | |
| Debt to EBITDA ratio (x) | 2.28 | 2.55 | |
| €/$ (Transaction) | 1.12 | 1.11 | |
| €/$ (Conversion) | 1.10 | 1.11 | |
| * IFRS3 restated, except “attributable to equity holders of the parent” |
1 IFRS3 restated income: impacts on COI: €0.0m in 16/17 and -€0.1m in 15/16, on Net Income: -€9.0m in 16/17 and -€57.6m in F15/16.
1
SALES REVENUE FOR THE 2016/2017 FISCAL YEAR
| In millions of euros | Full year | Full year |
% change |
Exchange rate |
Consolidation scope |
Organic growth |
| 2016/2017 | 2015/2016 | |||||
| Aerosystems activities | 2,235.0 | 2,160.6 | +3.4% | +0.4% | +0.0% | +3.0% |
| AircraftInteriors activities | 2,892.1 | 3,047.6 | -5.1% | +0.5% | +0.0% | -5.6% |
| Zodiac Seats | 1,245.8 | 1,387.9 | -10.2% | -0.6% | +0.0% | -9.6% |
| Zodiac Cabin | 1,646.3 | 1,659.7 | -0.8% | +1.3% | +0.0% | -2.1% |
| Group Total | 5,127.1 | 5,208.2 | -1.6% | +0.4% | +0.0% | -2.0% |
| €/$ (conversion) | 1.10 | 1.11 |
During its 2016/2017 fiscal year, Zodiac Aerospace generated sales revenue of €5,127.1m, down -1.6% in reported data and down -2.0% at like-for-like consolidation scope and exchange rates. Consolidation scope changes had no impact at Group level, while foreign exchange had a positive impact of +0.4 point on the year’s growth rate.
Sales revenues for the second half were down -1.4% to € 2,680 million, after a fall of -1.7% to € 2,447 million in the first half. In organic, the decline in sales was -1.5%, compared to a -2.6% decline in the first half. The second half marks a catchup and acceleration of sales for the Aerosystems branch, while the Aircraft Interiors activity shows a drop, caused by the Seats branch.
Current Operating Income for fiscal year 2016/2017 (IFRS3 restated)
| In millions of euros | FY 2016/2017 | FY 2015/2016 | % Change | ||||||
| HY1 | HY2 | Total | HY1 | HY2 | Total | HY1 | HY2 | Total | |
| Aerosystems | 130.6 | 235.7 | 366.4 | 160.3 | 216.6 | 376.9 | -18.5% | 8.9% | -2.8% |
| Aircraft Interiors Activities | -130.2 | -14.5 | -144.7 | -73.1 | -26.4 | -99.5 | 78.0% | -44.9% | 45.4% |
| Holding | -11.9 | 7.8 | -4.1 | -6.8 | -1.1 | -7.9 | 75.1% | -842.2% | -47.7% |
| Group Total | -11.5 | 229.0 | 217.6 | 80.4 | 189.1 | 269.5 | -114.2% | 21.1% | -19.3% |
Current Operating Income (COI) for the fiscal year stands at €217.6m, down -19.3% vs. €269.5m in FY 2015/2016, representing an operating margin of 4.2% vs. 5.2%.
This income is in the high end of the annual COI target of between €200m and €220m and corresponds to a sharp improvement in the second half, for which the COI totals €229m, compared to €189m in the 2015/2016 second half and a loss of €11m in the first half of 2016/2017. The current operating margin stood at 4.2% for the full year compared to 5.2% for the fiscal year 2015/2016. It stood at 8.5% in the second half of 2016/2017 compared to 7.0% in the second half of 2015/2016. By activities, Aerosystems has improved its COI by +€105m between the first and second half thanks to a robust activity level in the second half, while the Aircraft Interiors activities have reduced their loss by €116m thanks to improved operational performance.
For FY 2016/2017, foreign exchange rate impact was a positive €16.6m on changes in Current Operating Income, breaking down into a positive €24.2m conversion impact and a negative -€7.6m transaction impact. Consolidation scope changes had no impact. The research tax credit impact accounted for in Current Operating Income was €28.2m, vs. €25.6m in 2015/2016.
The Aerosystems branch (43.6% of total sales revenue) has performed well this year, with sales increasing by +3.4% for the full year, to €2,235.0m. The organic growth rate for its sales remains buoyant: +3.0% for the fiscal year, +5.5% in the second half and +6.4% for the fourth quarter only. This growth is driven by the ramp-up of the A350XWB program, for electrical distribution in particular, and by a large business volume from the IFE division which continues to win market shares.
Aerosystems reported, IFRS 3 restated, a slight fall of -2.8% to €366.4m in Current Operating Income compared to €376.9m, representing a margin of 16.4%. This can be partly explained by a negative forex impact of -€4.5m (-€0.3m for conversion impact and -€4.2m for transaction). Aerosystems activities experienced a particularly busy second half, which translates into sharp growth in Current Operating Income: €235.7m in the second half compared to €130.6m in the first half. Operational margin2 stood at 19.5% in the second half versus 12.7% in the first and 19.0% in the second half of the previous year.
Aircraft Interiors activities (56.4% of total sales revenue) report sales of €2,892.1m for fiscal year 2016/2017, down -5.1%.
-9.6% for the year and -13.0% in the fourth quarter, owing to the industrial difficulties facing the branch, sluggish activity and also in the second half an unfavorable comparison basis with the previous fiscal year.
Current Operating Income before IFRS3 of Aircraft Interiors activities amounts to -€144.7m for the full year compared to an operational loss of -€99.5m in 2015/2016. This amount reflects a strong level of production cost overruns in the Seats and Cabin branches, which had strongly impacted results for the first half. Current Operating Income before IFRS3 of Aircraft Interiors activities in the first half was a negative -€130.2m. This loss is reduced to -€14.5m in the second half, under the impact of the ongoing industrial recovery in the Cabin branch, which had to catch up with delays, and which is still ongoing in the Seats branch.
Non-current items amounted to -€47.5m vs. -€75.7m in 2015/2016. Income for the previous fiscal year included an expense of €58m linked to the depreciation of the Contour brand.
The Operating Income was €170.1m vs. €193.9m in 2015/2016.
Cost of net debt deteriorated by €22.4m following the arrangement of a multi-year forex hedge.
Income Tax was -€31.2m vs. -€39.6m owing to the decrease in income before tax mainly in France, the UK and Germany, despite an improvement observed in the United States. The tax rate increase to 29.4% vs. 26.0% in 2015/2016 mainly reflects the increasing weight in the geographical mix of income before tax generated in high tax jurisdictions (France and the United States).
Net Income for FY 2016/2017 stood at €73.4m and Net income attributable to equity holders of the parent at €73.4m down by -31.9% and-32.1% respectively.
2 Operational Margin: Current Operating Income (COI) on sales.
The improvement plans set up to ensure better control of cash generation have started bearing fruits. Net debt3 dropped sharply to€846.6m vs. €1,056.9m at end-August 2016 and €1,325m at end-February 2017, being a reduction of €478m in the second half, while gearing was 2.28x, compared to 2.55x at end August 2016, and significantly below the level of 3x, as indicated during the full year sales presentation. Gearing was 0.27 at end-August 2017 vs. 0.34 at end-August 2016.
Cash flow from operations amounts to €233.4m down by-28.5% compared to 2015/2016 (€326.5m) in line with the changes in Current Operating Income.
Cash generation was particularly strong in the second half: it amounted to €445m, thanks to the work achieved on WCR, in particular on inventories and receivables. WCR for operations4 represented 30.4% of sales revenue at the end of FY 2016/2017 vs. 33.2% of sales revenue in 2015/2016 and 37.4% of sales revenue in FY 2014/2015, thus returning to a pre-crisis level but still with a potential for improvement.
While striving to improve WCR, capital expenditure was also managed in a disciplined manner. Capital expenditure amounted to €195m, i.e. 3.8% of sales revenue, down compared to the previous year (€210m, 4% of sales revenue).
At the end of the year, Zodiac Aerospace reports a robust financial position. The available amount on confirmed financing lines totals €853m and the Group has cash of €684m, i.e., total liquidity of €1,537m.
The banking covenant defined by the Club Deal financing is net debt to Ebitda, the threshold of which was raised to 3.5x until the fiscal year 2017/2018 vs. 3x. At year end, this ratio was 2.28x.
Zodiac Aerospace performed well in the second half of 2016/2017, showing that the industrial recovery and transformation of Zodiac Aerospace Group are under way.
Today, we have three strategic priorities.
The first priority is the re-establishment of our relations with our customers, which has been deteriorated during the crisis. It is well on its way thanks to the improvements made by the Cabin and Seats branches, in terms of deadlines and quality.
The second priority is to make these performances sustainable and to achieve a level of operational excellence. Firstly, this entails the deployment of an operational system, known as Zodiac Aerospace Operating System (ZAOS). This deployment is being done pragmatically, but in a strict and disciplined manner. Secondly, the transformation of activities has begun with the streamlining of engineering and manufacturing activities in North America, an increase in capital expenditure to upgrade facilities, and finally, an extension of the business scope of Zodiac Aerospace Services which will allow it to remain at the cusp of customer service.
The third priority is Research, Development and Technologies. This is a priority that seeks to address customer demands, whether in terms of reducing environmental impact, improving energy efficiency, improving onboard comfort and safety or again increasing income generation and differentiation for airline companies.
3 Net debt does not reflect the €243m hybrid financing accounted for in shareholder’s equity as required by IAS 32.
4 Trade WCR: Inventories and work in progress + Net receivables – Net payables
In 2017/2018, Zodiac Aerospace will continue and accelerate, whenever possible, its industrial recovery and transformation.
The Group expects a slight drop in its sales, which breaks down into a new progression in Aerosystems activities, at a rhythm similar to that of the previous fiscal year, a stabilization of Cabin activities, and a decline of Seats, impacted by poor past operational performance.
Current Operating Income is expected to grow sharply. Just as for sales revenue, the second half will be significantly higher than the first half.
Cash generation should remain strong, in particular thanks to the ongoing actions to reduce inventories, which should allow an increase in production expenditure.
About Zodiac Aerospace
Zodiac Aerospace is a world leader in aerospace equipment and systems for commercial, regional and business aircrafts and for helicopters and spacecraft. It develops and manufactures state-of-the-art solutions to improve comfort and facilities on board aircrafts and high-technology systems to increase aircraft performance and flight safety. Zodiac Aerospace has 35,000 employees worldwide and generated revenue of €5.1bn in 2016/2017. w ww.zodiacaerospace.com
| Next meetings: | Q1 2017/2018 sales
General meeting of shareholders |
December 13, 2017 (after stock exchange closing)
January 9, 2018 |
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| ZODIAC AEROSPACE CONTACTS
Pierre-Antony Vastra Tel: +33 (0)1 61 34 25 68 Florent Defretin Tel: +33 (0)1 61 34 03 34 Isabelle Delhom (Investor meeting) Tel.: +33 (0)1 61 34 19 86 investisseurs@zodiacAerospace.com 61, rue Pierre Curie – CS20001 – 78373 PLAISIR CEDEX |
MEDIA/PRESS CONTACTS
IMAGE 7 Grégoire Lucas Tel: +33 (0) 1 53 70 74 94 / gU regoire.lucas@image7.fr
ZODIAC AEROSPACE |
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UAPPENDICES
| In millions of euros | 1st quarter 2016/2017 | 2nd quarter 2016/2017 | 3rd quarter 2016/2017 | 4th quarter 2016/2017 |
| Aerosystems activities | 477.3 | 553.6 | 585.9 | 618.2 |
| Aircraft Interiors activities | 724.6 | 691.5 | 756.4 | 719.6 |
| Zodiac Seats | 306.5 | 300.9 | 336.2 | 302.2 |
| Zodiac Cabin | 418.1 | 390.6 | 420.2 | 417.4 |
| Group Total | 1,201.9 | 1,245.1 | 1,342.3 | 1,337.8 |
| €/$ conversion | 1.10 | 1.06 | 1.08 | 1.15 |
| In millions of euros | 1st quarter 2015/2016 | 2nd quarter 2015/2016 | 3rd quarter 2015/2016 | 4th quarter 2015/2016 |
| Aerosystems activities | 505.9 | 514.7 | 549.6 | 590.3 |
| Aircraft Interiors activities | 732.0 | 736.4 | 803.1 | 776.0 |
| Zodiac Seats | 320.8 | 320.8 | 385.6 | 360.6 |
| Zodiac Cabin | 411.2 | 415.6 | 417.5 | 415.4 |
| Group Total | 1,237.9 | 1,251.1 | 1,352.7 | 1,366.3 |
| €/$ conversion | 1.11 | 1.09 | 1.13 | 1.12 |
(Quarter versus the previous year quarter)
| Based on reported data | Q1 | Q2 | Q3 | Q4 |
| Aerosystems activities | -5.7% | +7.6% | +6.6% | +4.7% |
| Aircraft Interiors activities | -1.0% | -6.1% | -5.8% | -7.3% |
| Zodiac Seats | -4.4% | -6.2% | -12.8% | -16.2% |
| Zodiac Cabin | +1.7% | -6.0% | +0.7% | +0.5% |
| Group Total | -2.9% | -0.5% | -0.8% | -2.1% |
| Aerospace activities * | -2.3% | +0.0% | -0.8% | -2.1% |
| Based on organic revenue | Q1 | Q2 | Q3 | Q4 |
| Aerosystems activities | -6.0% | +6.1% | +4.7% | +6.4% |
| Aircraft Interiors activities | -0.5% | -8.3% | -8.6% | -4.5% |
| Zodiac Seats | -1.9% | -7.2% | -14.5% | -13.0% |
| Zodiac Cabin | +0.6% | -9.3% | -3.0% | +3.2% |
| Group Total | -2.8% | -2.4% | -3.2% | +0.2% |
| Aerospace activities * | -2.1% | -1.8% | -3.3% | +0.2% |
*Excluding Trains and Airbags
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(Period-end total versus the same period of the previous year)
| Based on reported data | 1st quarter | 1st half | 9 months | Full year |
| Aerosystems activities | -5.7% | +1.0% | +3.0% | +3.4% |
| Aircraft Interiors activities | -1.0% | -3.6% | -4.4% | -5.1% |
| Zodiac Seats | -4.4% | -5.3% | -8.1% | -10.2% |
| Zodiac Cabin | +1.7% | -2.2% | -1.2% | -0.8% |
| Group Total | -2.9% | -1.7% | -1.4% | -1.6% |
| Aerospace activities * | -2.3% | -1.2% | -1.0% | -1.3% |
| Based on organic revenue | 1st quarter | 1st half | 9 months | Full year |
| Aerosystems activities | -6.0% | +0.1% | +1.7% | +3.0% |
| Aircraft Interiors activities | -0.5% | -4.4% | -5.9% | -5.6% |
| Zodiac Seats | -1.9% | -4.6% | -8.3% | -9.6% |
| Zodiac Cabin | +0.6% | -4.3% | -3.9% | -2.1% |
| Group Total | -2.8% | -2.6% | -2.8% | -2.0% |
| Aerospace activities * | -2.1% | -2.0% | -2.4% | -1.7% |
*Excluding Trains and Airbags
| Condensed balance sheet | |||||
| In millions of euros | 8/31/2017 | 8/31/2016 | 8/31/2017 | 8/31/2016 | |
| Equity | |||||
| Goodwill | 1,915.3 | 1,994.7 | Capital | 3,112.1 | 3,109.5 |
| Intangible assets | 651.7 | 653.6 | Income | 73.4 | 108.1 |
| Property, plant & | 496.7 | 493.0 | Net Equity | 3,185.5 | 3,217.6 |
| Other, including deferred | 68.9 | 44.5 | Prov. & deferred taxes | 280.8 | 300.6 |
| Financial liabilities | 599.9 | 984.7 | |||
| Non-current assets | 3,132.6 | 3,185.7 | Non-current liabilities | 880.7 | 1,285.3 |
| Prov. Risks & Contingencies | 165.2 | 165.4 | |||
|
Inventories |
1,181.8 |
1,360.1 |
Financial liabilities |
934.4 |
361.3 |
| Trade receivables | 971.8 | 1,046.5 | Accounts payables | 506.2 | 542.1 |
| Other | 215.5 | 210.3 | Employees | 248.2 | 228.7 |
| Cash and cash equivalents | 683.8 | 268.8 | Other | 265.2 | 271.8 |
| Current assets | 3,052.9 | 2,885.7 | Current liabilities | 2,119.2 | 1,569.3 |
| Assets held for sale | – | 0.7 | |||
| Total assets | 6,185.5 | 6,072.1 | Total liabilities | 6,185.5 | 6,072.1 |
| Summary Cash flow statement | ||
| In millions of euros | 2016/2017 | 2015/2016 |
| OPERATING ACTIVITIES | ||
| Cash flow from operations | 233.4 | 326.5 |
| Change in WCR | 210.5 | -68.5 |
| Cash flow generated from continuing operations | 443.9 | 258.0 |
| INVESTMENT OPERATIONS | ||
| Acquisition of intangible fixed assets | -76.1 | -84.8 |
| Acquisition of tangible fixed assets and other | -130.9 | -120.3 |
| Changes to the scope of consolidation | – | 0.5 |
| Cash flow from investments in continuing operations | -207.0 | -204.6 |
| FINANCING OPERATIONS | ||
| Change in financial debt | 187.3 | -115.3 |
| Hybrid loan | -5.0 | 248.0 |
| Increase in equity | 10.8 | 1.1 |
| Treasury stock | 2.2 | 5.8 |
| Dividends | -53.5 | -88.5 |
| Cash flow from the financing of continuing operations | 141.8 | 51.2 |
| Currency translation adjustments, beginning of period | 21.4 | -8.2 |
| Change in cash position | 400.1 | 96.4 |
| Income Statement | 2016/2017 | 2015/2016 | % Change |
| Revenue | 5,127.1 | 5,208.2 | -1.6% |
| Depreciation charge | 147.4 | 138.7 | |
| Charges to provisions | 96.6 | 86.0 | |
| Current operating income | 217.6 | 269.6 | -19.3% |
| Non-current operating income | -47.5 | -75.7 | |
| Operating income | 170.1 | 193.9 | -12.3% |
| Cost of net debt | -61.7 | -39.3 | -56.9% |
| Other financial income and expenses | -1.9 | -2.4 | |
| Income taxes | -31.2 | -39.6 | 21.1% |
| Results of companies accounted for using the equity method | -1.7 | -4.7 | |
| Net income from continuing operations | 73.4 | 107.9 | -31.9% |
| Net income from discontinued operations | – | – | |
| Net income | 73.4 | 107.9 | -31.9% |
| Net income attributable to Non-Group shareholders | 0.0 | -0.2 | |
| Net income attributable to Group shareholders | 73.4 | 108.1 | -32.1% |
The audit reports will be issued after the completion of the review of the notes to the consolidated and full-year financial statements.
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