In 2012, LISI AEROSPACE achieved sales revenue of €591.7m, up 45.1% compared to 2011.

The division's three strategic units have contributed to such strong growth:

  • Kickoff of the Boeing Commercial Aircraft contract: the resulting growth acceleration of the US "Fasteners" platform was particularly noticeable in the second half (+26%).
  • In Europe, strong business development and delivery of components for the A350. Representing more than the equivalent of a dozen chipsets, however, it slowed down gradually in the second half of the year (+20% in H2 and +12% in Q4).
  • Consolidation and integration of the "Structural components" Business Unit which produces positive effects (business growth of +18% during H2 2012). In contrast, the fire at the Colomiers (Haute-Garonne) site disrupted activity and added complexity to the integration of Indraéro Siren into the Group.

In addition, the division gained medium-term visibility with the completion of major contracts on platform structuring programs such as the A320 NEO and the A350 or the B787 or equipment such as GENX or LEAP engines. In 2012, Airbus was the division's top customer, although it was considerably caught up by Boeing (up 50% over last year), which now represents directly and indirectly about 20% of LISI AEROSPACE sales.


Market

Expansion of the Aerospace market

The economic situation was very favorable, driven by aircraft of 100+ seats:

  • increased rates on all of the range's aircraft both at Airbus and Boeing
  • acceleration of the new A380, B787 programs, despite the technical difficulties encountered by manufacturers
  • strong business development related to the A350, the A320 NEO, and the B737 MAX.

Upstream, the global air passenger traffic remains strong with an increase over the period of the same order of magnitude as in 2011, or 6% (source: IATA November 2012) and a fill factor of companies of 79% (against 78.1% in 2011). 31% of world traffic was carried out in Asia, as in previous years.

Airbus

For the 11th consecutive year, Airbus increased its production and delivered to 89 customers (of which 17 new ones) a record 588 units, up 10% compared to 2011 (534). The manufacturer exceeded its goal of 650 orders, capturing 914 gross orders. Its order book sets a new record with 4,682 units worth over $638 billion.

Deliveries break down into 455 single-aisle aircraft (421 in 2011) and 103 widebody aircraft (87 in 2011), highlighting the success of the A330 family whose monthly production rates have never been that significant (9.5 in 2012 and 10 scheduled for spring 2013). The A380 was produced in 30 units (26 in 2011).

Development and industrialization of the A350 XWB are continuing. The final assembly line is fully operational, and the first flight is expected during the first half of 2013.

The launch of the A320 NEO is going according to plan and most packages have been allocated during the year 2012.

The development phase of the A400M ends with more than 300 hours of operation and reliability of tests leading to the civil and military certification is planned for the first quarter of 2013. The first delivery is scheduled for the second quarter of 2013, with a total of four deliveries by the end of the year (3 for the French Air Force and for the Turkish army).

Boeing

Boeing ended the year 2012 with historically high performance, with 1,203 net orders for commercial aircraft (the second best year in its history) and 601 aircraft delivered, the best year since 1999. Such performance resulted from higher production rates and for the 737 program, an unprecedented number of orders (4,373 units) and deliveries:

  • 1,124 net orders for the 737 family, with 914 orders for the 737 MAX,
  • 46 B787s were delivered during the year,
  • the 777 program totaled 83 deliveries,
  • 31 aircraft in the Intercontinental and Cargo versions of the new 747-8 were delivered in 2012.

Other aircraft markets

The helicopter market was very well maintained, both for civilian and military programs, with a growing market benefiting from the acceleration of new programs.
Other markets such as business jets and regional aircraft remained sluggish during the period, a trend that is expected to continue in the short term.

Motorists

The aero-engine market was reorganized in 2012 and competition toughened between the various players. The market of engines for short-haul aircraft (A320 Neo, B737 Max) is growing rapidly because of the very large backlog of their respective manufacturers, Airbus and Boeing.

In this very important market in volume, competition is organized between Pratt & Whitney with its NGPF Pure Power engine and the GE-SNECMA alliance with its LEAP engine.

GE with its GP7000, GE90-115 range for widebody aircraft, the B777 and A380, is continuing its ramp-up.


Activity

In €m 2012 2011** Changes
Sales revenue 591.7 407.6 +45.1%
EBIT 91.3 51.1 +78.4%
Sales revenue 87.6 57.0 +53.6%
Net CAPEX -38.5 -25.0 +54.0%
Registered employees at period end 5,205 4,677 +11.3%
Full time equivalent head count* 5,456 4,141 +31.8%
* Including temporary employees
** The Group anticipated as at January 1, 2012 the implementation of the revised IAS 19. The 2011 statements have been restated accordingly.


In a business with high fixed costs such as the aerospace components industry, the volume effect is key and may, when ramp-up conditions are met, generate the expected margin level to finance large investments and the working capital requirements. The level of activity between the various sites is balancing gradually, thereby contributing to a more harmonious overall result.

Up 78.4% compared to 2011, EBIT reached €91.3 million and the current operating margin stood at 15.4%, an increase of 2.9 percentage points in one year. This increase reflects the volume effect mentioned above, a positive exchange rate effect and hedging on the dollar (+€1.5 million) and a general improvement in productivity (+€5.5 million). The fact that the division was prepared since 2010, ahead of cycle, accounts for the fact that the recovery could be absorbed under such excellent conditions.

Hiring staff continued, concentrated on the Torrance site in the United States (+ 100), Izmir, Turkey (+ 80) an in Casablanca, Morocco (+84 people) to reach 5,456 full-time equivalents in December 2012.

Investments were supported and totaled €38.5 million disbursed over the period and €47.3 million of commitments. Among the investments made, one should mention the extension of the new plant in Marmande (Creuzet Aerospace) for around €8 million and the new surface treatment unit project in Torrance (USA) for approximately $11 million.

Free Cash Flow is very positive due to the good level of profitability but also to the significant effort on working capital in general and inventories in particular: these decreased by some 18 consumption days.

Outlook

While no threat can be perceived on the aerospace to date, one should nevertheless assess the growth prospects taking into account the foreseeable inventory effects:

  • European business should see a pause in growth after the last very dynamic 3 years and the development of the assembly line for the A350,
  • activity in the United States still has a significant growth potential that could be put off by the B787's technical problems,
  • finally, the "Structural components" business, which is more correlated with the assembly rates of its major customers Airbus, Safran and GE, and driven by the industrialization of new products and the positioning on aircraft and engine programs for tomorrow - contracts signed for the A350, the A320 NEO, the LEAP engine, the GE engines - should experience a new dynamic year.

In terms of profitability, the division reaches levels that ought to be consolidated. Business (volume effect) can not grow at the same growth rate as in 2012, while still remaining very strong, if production rate increases and developments of major projects keep their promises.

The amount of investments corresponding to such new projects and to capacity increases should be higher than in fiscal 2012.



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