- Excellent resistance of the world aerospace market
- Improvement of all financial performance indicators
- Sharp rise in investments related to consolidating operations and to the launch of new products
- A pause in growth expected in 2014
International air passenger traffic was up 4.5% as compared with 2012, and has confirmed its average annual growth rate of 5.4%1 over 3 financial years. Freight traffic was also up 1.0%1 in 2013 after 2 years of decline.
Boeing and Airbus posted similar developments, with 648 deliveries for Boeing as against 626 for Airbus, and 1,355 net orders for Boeing and 1,503 for Airbus. The order book exceeds 10,600 aircraft for the two manufacturers, an 8-year record for most programs.
On the other hand, the regional aircraft markets for business planes and helicopters have not displayed the same dynamism. The military applications segment has suffered drastic reductions in the Defense budgets in both Europe and the USA.
|Operating cash flow||107.5||87.6||+22.8%|
|Free Cash Flow 2||32.6||38.8||-16.0%|
|Registered employees at period end||5,604||5,205||+7.7%|
|Full time equivalent head count 3||5,951||5,456||+9.1%|
2 : Free Cash Flow: operating cash flow minus net industrial CAPEX and changes in working capital requirements.
3 : Including temporary employees
Consolidated sales revenues were up at a solid rate of 12.2%, with however a slowdown in the second half-year (up 7.6%, including +5.2% in Q4). The two activities of the divisions contributed similarly to the growth:
- sales of "Aerospace Fasteners" reached €511M under the impetus of strong growth at Boeing and the engine manufacturers, while Airbus settled at a high level by the end of the financial year,
- sales of "Structural Components" came to €153M and were mainly motored by the business in primary components for Airbus and Safran.
For LISI AEROSPACE Fasteners order taking is slightly down as compared with the record in 2012, which is reflected in the book-to-bill ratio of just under 1. The "structures" and "engines" applications were strongest in the US. This situation has resulted in the expected end of the initialization phase of the A350 assembly line, while the strengthening of the Boeing contract continues.
At the operational level the organization of the "Aerospace Fasteners" business has been optimized at all manufacturing locations except for Torrance (USA). Today the "Structural Components" business holds the largest potential for profitability.
Management of this new development phase, with favorable volume effects for the third consecutive year and productivity increases, have been well absorbed, which has translated into a new improvement in financial performance: EBIT was thus up 2.4 points to 17.8% (15.4% in 2012).
It should be noted that non-current expenses of €5.5M linked to reorganization projects in the Racing segment in the USA have led to non-recurring amortization of intangible assets.
With cash flow up almost €20M at €107.5M, the division was easily able to finance the investments undertaken and recognized at €52.3M as well as the increase in inventories, which were nonetheless down in terms of sales days.
The main investment projects are broken down as follows:
- Strengthening industrial facilities in Europe and expanding the Izmir site in Turkey (€20.1M),
- Starting up the new surface treatment line in the USA and the large diameter Titanium cell in Canada (€16.7M)
- Development of new products in the "structural components" division (€8.9M).
At over €32M, Free Cash Flow remains at a good level.
Following several consecutive financial years of strong growth, improvement in performance and investments, 2014 is expected to be a year of consolidation.
North American business ought to continue to benefit from Boeing's strengths and ought to increase with two major products: the B737 at a rate of 42 aircraft per month over the year, and the B787 with the gradual acceleration of its industrial stage.
Takeoff of volumes for the programs of the A350, A320 Neo, Leap 1A, 1B and Silvercrest - the new generation of engines developed by Snecma for business planes - ought to have a positive impact on the "Structural Components" business. The Morocco factory will also contribute to direct deliveries to customers located in the same geographic area.
LISI AEROSPACE expects to offset the expected downturn in demand for fasteners for the A350 by an increase in volumes in the USA and by growth in the "Structural Components" segment. In terms of quality, the LEAP program ("LISI Excellence Achievement Program") has been implemented in all the manufacturing units with the expected productivity gains. The reorganization of the North American logistics platform ought to noticeably improve working capital requirements.
Accordingly, we will have to wait until 2015 to see additional, new growth areas crystallize, which will continue the growth achieved in recent years.
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