Zodiac Aerospace: Zodiac Aerospace reports +33.3% increase in net earnings for its H1 2011/2012

Zodiac Aerospace reports +33.3% increase in net earnings for its H1 2011/2012

Financial results for the first half of 2011/2012

• Current Operating Income before IFRS 3[1] grew by 20.3%. The margin for the period was 14.3%^[2]
• Financial debt remains under tight control following the Heath Tecna and Contour Aerospace acquisitions, and now represents 59% of equity
• On the basis of this good start to the year, Zodiac Aerospace forecasts double-figure organic revenue growth for the full-year 2011/2012, with a margin rate of at least 14% 

Plaisir, April 24, 2012 - The Zodiac Aerospace Supervisory Board has approved the Group financial statements for the first half of 2011/2012 (September 1 to February 29).

Strong growth in Current Operating Income

Sustained business activity in the first half

All segments contributed to strong growth in Current Operating Income

Current Operating Income (COI) before IFRS 3¹ rose by 20.3% in the first half of 2011/2012, compared with the same period of the previous fiscal year. Currency exchange rate changes imposed a negative overall impact of €7.4 million on COI growth, whilst consolidation scope effects contributed €3.1 million to COI. At like-for-like consolidation scope and exchange rate, and excluding the impact of IFRS 3 compliance, COI rose by 22.6% during the first half of 2011/2012.

Cabin Interiors

Current Operating Income for the Cabin Interiors segment (before IFRS 3) rose by 20.7% to €158.6 million (17.7% at like-for-like consolidation scope and exchange rate). Its current operating margin rate was 16.7%, compared with 16.9% in the first half of 2010/2011.

AeroSafety & Technology

The Aerosafety & Technology segment reported revenue growth of 7.9% for the first half of the year (8% in terms of organic growth). Emergency Evacuation Systems, Interconnect Systems and Elastomer Systems continued the trend seen in Quarter 1 by delivering double-figure organic growth as a result of increased aircraft manufacturer production flows.

At €31.3 million, its Current Operating Income grew by 17.4% in terms of published data. In terms of organic growth, and excluding a slightly unfavorable exchange rate impact, COI for this segment rose by 20.1%. The current operating margin rate for this segment was 10.8%, compared with 10% in the first half of 2010/2011.

Aircraft Systems

The Aircraft Systems segment reported significant revenue growth of 23.0% in terms of published data (24.3% in terms of organic growth) to end the first half at €324.8 million. The difference between the two growth figures is accounted for by a slight negative currency movement of 1.2 points. The acceleration in growth compared with Quarter 1 is accounted for by increased aircraft manufacturer production flows and the rebuilding of stock levels by some customers. As in Quarter 1, the performance delivered by Actuators, Sensors and Motors reflected sustained business levels in Seats with customers outside the Group, as well as with internal customers.

Despite a negative transaction exchange rate impact of €6.9 million, Current Operating Income for the Aircraft Systems segment rose by 20.9% to €39.3 million (42.9% at like-for-like consolidation scope and exchange rate). Its current operating margin rate was 12.1%, compared with 12.3% in the first half of 2010/2011.

Strong growth in net earnings

Total non-current operating items represented a loss of -€0.7 million, compared with -€6.6 million for the first half of 2010/2011. Operating Income was up by 25.6% to €223 million.

Income from assets previously held for sale (the Issy Les Moulineaux building and Driessen Services) was €11 million, net of related taxes.

Financial expenses remained stable at €14.6 million, compared with €14.2 million in the previous fiscal year, despite higher levels of borrowing following the Heath Tecna and Contour acquisitions.

All in all, net earnings rose by 33.3% to €152.4 million, compared with €114.3 million.

Tightly-controlled net financial debt

At the end of the period, net financial debt totaled €1,054 million, compared with €796 million at the end of the first half of 2010/2011 and €586 million at the end of the 2010/2011 fiscal year.

The main reason for this increase was the acquisition of Heath Tecna on September 1, 2011, and that of Contour Aerospace on January 19, 2012, which valued the companies at $114 million and £274 million respectively. Heath Tecna has been consolidated in the financial statements since September 1, 2011, and Contour Aerospace since February 29, 2012.

The 'trade' Working Capital Requirement increased in proportion to revenue growth, and included €32 million relating to consolidation of Contour with effect from February 29. Excluding this latter factor, it ended the first half at 31.8% of revenue, compared with 33.9% for the previous fiscal year.

Growth prospects

In 2011/2012, Group financial results are likely to benefit from a currency exchange effect more favorable than that seen in 2010/2011. The Group has hedged 90% of its forecast net exposure to transaction currency rates during the 2011/12 fiscal year at a €/$ rate of 1.33. For the 2012/2013 fiscal year the Group has hedged 25% of its forecast net exposure to transaction at a €/$ rate of 1.274.

On the basis of the good results reported for the first half, the Group expects revenue growth to continue in the second half of the year although the comparison basis shall be more demanding with a H2 2010/2011 which grew significantly. Zodiac Aerospace will also benefit from the consolidation of Contour Aerospace.

All in all, for the full year 2011/2012, Zodiac Aerospace forecasts double-figure organic revenue growth and a current operating margin of at least 14%, despite a negative impact from the non aerospace businesses.

Olivier Zarrouati, Chief Executive Officer, declared "We are delighted with this good set of results for this first half, which allow us to target a double digit organic growth of our sales and a Current Operating Margin of at least 14 %, in spite of the negative impact of the non aeronautical activities. Owing to a healthy balance sheet, we are going to pursue our strategy of development by organic growth and by acquisitions."

About Zodiac Aerospace

Zodiac Aerospace is a world leader in aerospace equipment and systems for commercial, regional and business aircraft, as well as helicopters and space applications. Zodiac Aerospace employs 26,000 people worldwide, and generated revenue of €2.75 billion in 2010/2011 from its three business segments of Aerosafety & Technology, Aircraft Systems and Cabin Interiors.

Consolidated sales revenue per quarter

VARIANCES
(Quarter versus the same quarter of the previous year)

Variances in organic growth versus 2010/2011

*Excluding Rail and Airbags

Cumulative Consolidated Sales Revenue

VARIANCES
(Period-end total versus the same period of the previous year)

*Excluding Rail and Airbags

Current Operating Income by segment
Current Operating Income by segment (before IFRS 3)

Simplified Income Statement

*of which IFRS 3 compliance: -€1.7 million

Cash flow statement

⁽¹⁾ Excluding restatement of the Driessen Services disposal

Balance sheet (simplified)

⁽¹⁾ Excluding restatement of the Driessen Services disposal

The limited audit of the half-year financial statements is currently being finalized.
The report on the half-year financial information will be issued following completion of the review of the notes to the half-year financial statements.

[1] Impact of IFRS 3 compliance: negligible impact in H1 2011/2012, compared with -€1.7 million in H1 2010/2011
[2] Current Operating Income before IFRS 3 / Sales Revenue
[3] Excluding restatement of the Driessen Services disposal
[4] COI: Current Operating Income
[5] Gearing: Net Financial Debt / Net Equity
[6] The changes in consolidation scope relate to: a) acquisitions: Heath Tecna was consolidated for 6 months from Sept. 1, 2011, one additional month of Sell, which was consolidated for only 5 months of the first half of 2010/2011; and b), the disposal of Driessen Services (at Nov 8, 2011, deconsolidated as of Sept 1^st, 2011).
[7] The changes in consolidation scope relate to: a) acquisitions: Heath Tecna was consolidated for 6 months from Sept. 1, 2011, one additional month of Sell, which was consolidated for only 5 months of the first half of 2010/2011; and b), the disposal of Driessen Services (at Nov 8, 2011, deconsolidated as of Sept 1^st, 2011).