Zodiac Aircraft Systems

EU Supplier Day 2015

Saclay – September 2nd, 2015

ZODIAC AIRCRAFT SYSTEMS

Introduction - WelcomeIntroduction - Welcome

Supplier Day event objectivesSupplier Day event objectives

� Introduce the Supply base to Zodiac

Aircraft Business and strategy

� Provide the Suppliers with Supply

Chain Expectations

� Explain the Zodiac Aerospace � Explain the Zodiac Aerospace

Preferred Supplier Program , selection

criteria and objectives

� Create business opportunities

� Q&A from attendees

Scope of the EU Supplier day 2015Scope of the EU Supplier day 2015

� 100 Companies selected, 131 attendees

• Suppliers from Europe and North Africa

� 46 Attendees from Zodiac Aircraft Systems

� Zodiac Cabin & Galley CEO

� Zodiac AeroSystems CEO

� Zodiac Aircraft Systems CEO� Zodiac Aircraft Systems CEO

� Divisions and BU CEOs from EU

� Purchasing and Supply Chain Staff

� Corporate departments Rep.

� 1 Guest � M.Marcé, SPACE Cluster IDF

Congratulations on your selection for this event !

AGENDA10H Welcome10H30 Introduction M.Blandet, VP Purchasing Aircraft Systems

Messages from CEOs Mrs Assouad, CEO Cabin & GalleysM. Debray, CEO Aircraft Systems

11H00 Zodiac Aerospace at a Glance M. Debray, CEO Aircraft Systems- Zodiac Aerospace Business- Zodiac Aircraft Systems Challenges

12h00 Lunch

13H00 Aircraft Systems Purchasing Strategy- Supplier Management Strategy M.Blandet, VP Purchasing Aircraft Systems - Preferred Supplier Program & Survey M.Carcanague, CPO Zodiac Data Systems- Preferred Supplier Program & Survey M.Carcanague, CPO Zodiac Data Systems

14H00 Supplier Performance Management- Performances & Objectives 2016 Mrs Le-Gloanec, Supplier Contract Aircraft Systems - Supplier Performance Management M. Blanc, SPM Manager ZSSM - Gifas Cluster Experience M.Marcé, SPACE

15H30 Break

15H45 Air Supply Deployment Mrs Prado, Supply chain Project, Aircraft Systems

16H00 Award Ceremony and Conclusion M.Blandet, VP Purchasing Aircraft Systems

ZODIAC AIRCRAFT SYSTEMS

Farewell from Yannick Farewell from Yannick

Yannick Assouad – CEO, Zodiac Cabin and Galley Equipment

ZODIAC AIRCRAFT SYSTEMS

Zodiac Aerospace Update Zodiac Aerospace Update

Gilles Debray – CEO, Aircraft Systems

� Established in 1896: one of the oldest aerospacecompany in the world� The Marine activities were sold in 2007

� Today Zodiac Aerospace belongs to World’s top 10 equipment manufacturers

� 3 segments of activities : Cabin , Seats and Systems

Zodiac AerospaceZodiac Aerospace

� 3 segments of activities : Cabin , Seats and Systems+ 1 aftermarket activity

� €4.2bn Revenues in 2013/14, Est. €5.0bn Revenues in 2014/2015

� More than 30,000 employees worldwide

* Excluding IFRS 3 impact

US

≈ 11,000 employees

US

≈ 11,000 employees

America(excl . US)America

(excl . US)

France

≈ 8,000employees

France

≈ 8,000employees

A global footprint

Africa, Asia, Australia, Middle

East

≈ 4,500employees

Africa, Asia, Australia, Middle

East

≈ 4,500employees

Europe(excl. France)

≈ 4,500 employees

Europe(excl. France)

≈ 4,500 employees

(excl . US)

≈ 4,000 employees

(excl . US)

≈ 4,000 employees

employeesemployees

August 2015 ≈ 32,000 employees

US: 34% Rest of the World: 25%

France: 25% Europe (Excl. France): 14%

Zodiac Aerospace expertiseZodiac Aerospace expertise� Turnkey integrated systems

� Innovative and break-through designs

� A Tier 1 risk-sharing partner position for future aircraft platforms

� Zodiac Aerospace expertise acknowledged by a large customer base… � Boeing, Embraer, Airbus, Bombardier, Dassault, Irkut, Sukhoi,

Gulfstream, COMAC, Cessna, AgustaWestland, Bell,…..

� …and its selection on all recent commercial airplane s such as� ERJ 170/190, A350XWB, B787, A380, CSeries,

CRJ1000/900,G650,F7X, B747-8, MC21, C919 …

Page 11

�A successful external growth strategy

�Key metrics� Be a world leader� In selected aerospace niche markets

The development strategy combines internal and external growthThe development strategy combines internal and external growth

� With strong barrier to entry� And a good aftermarket content� Technology oriented� Profitable companies� Additional metric is operations in dollar and/or in CCC

� 40 acquisitions in Aerospace since 1978

A new acquisition in December 2014 Enviro SystemsA new acquisition in December 2014 Enviro Systems

� US company founded in 1979, located in Seminole (Oklahoma) and employing approximately 160 people.

� $34m sales for FY14 (end sept)

� Enviro Systems manufacture environmental control systems consisting of bleed air mass inflow control systems, bleed air temperature control systems, and systems, bleed air temperature control systems, and vapor cycle air conditioning systems for business, regional, military, and rotary wing aircraft

6%

7%

8%

9%

10%Change in date ofChinese New Year

Marchpreliminary

Easter celebrations& Flight MH370

World Air Traffic GrowthRevenue Passenger Km – Comparison with Historic Tren dWorld Air Traffic GrowthRevenue Passenger Km – Comparison with Historic Tren d

Percentage change compared to same period in previo us year

0%

1%

2%

3%

4%

5%

Jan Feb Mar Apr May Jun2014

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun2015

Jul Aug Sep Oct Nov Dec

Zodiac Aerospace - H1 2014/2015 results - April, 22nd 2015Page 15

Historic trend

2014: +5.6%

�OE : 65% of sales �Aftermarket (spares + repair + retrofit): 35% of sales�A balanced revenue contribution

Zodiac Aerospace has a diversified mix of customersZodiac Aerospace has a diversified mix of customers

Zodiac Aerospace - H1 2014/2015 results - April, 22nd 2015Page 16

� Line-fit installation ( ≈50% of total revenues)� Recovery of air traffic� Production ramp-up for new a/c programs

� Over $2m per a/c (SFE, w/o seats) on the Airbus A380� Over $2.5m per a/c on the Boeing 787 Dreamliner

� Zodiac Aerospace is selected supplier on all major commercial aerospace programs

�Aftermarket & retrofit ( ≈40% of total rev.)

Promising perspectives for growthPromising perspectives for growth

� Zodiac Aerospace assures the aftermarket availability for its complete product base

� A new organization providing increased efficiency� Growth perspectives due to worldwide increasing fleet of

aircrafts in operation

� Institutional & defense ( ≈10% of total rev.)� Good perspectives: emergency arresting systems,

telemetry systems (Ariane V program)…

Zodiac AerospaceH1 2014/2015 OutlookZodiac AerospaceH1 2014/2015 Outlook

�A favorable environment� Increase in sales� Improvement of the $/€ exchange rates

�Offset by the difficulties in the Seats activities� Production cost variances, extra costs and penalties weight on our results� H1 Operating Income significantly impacted

SummarySummary

� H1 Operating Income significantly impacted

�Priority #1 is to resume on time deliveries� Recovery plan being implemented� Improvements in the various factories� H2 will still be impacted

169.2

116.1

0

50

100

150

200

H1 13/14 H1 14/15

263.0

177.7

0

50

100

150

200

250

300

H1 13/14 H1 14/15

H1 14/15 results impacted by operational difficulties in SeatsH1 14/15 results impacted by operational difficulties in Seats

1997.72324.1

0

500

1000

1500

2000

2500

H1 13/14 H1 14/15

(In € million)Sales

+ 16.3%

(In € million)

-31,4%

Net Earnings*Current Operating Income*(In € million)

-32.4%

*net financial debt/ equity

Aerosafety13%

Aircraft Systems

30%

Seats 27%

Cabin & Structures

18%

Galleys & Equipment

12%

Sales breakdown

Aircraft Interiors

57% * Based on trade WCR

* Excluding IFRS3 impact* Excluding IFRS3 impact

€/$ (transaction) 1.36 1.28

0

100

200

300

400

500

600

700

800

H1 2013/2014 H1 2014/2015

Data Systems

Water & Waste Systems

Entertainment & Seat Technologies Controls

Fluid Management

Electrical Systems

Cabin & Cockpit Systems

�+12.9% increase in sales� +4.9% like-for-like� +1.4pt from scope� +6.6pts from forex

Revenues

In € million

Organic growth: +4.9%

+ 12.9%

703.5623.1

Zodiac Aircraft Systems Key Events H1 2014/2015Zodiac Aircraft Systems Key Events H1 2014/2015

H1 2013/2014 H1 2014/2015

�Positif impact of the dollar on COI*� +15,1% to €105.1m� 14.9% margin� A positive impact of the €/$ rate

Current Operating Income*

Organic growth: +4.9%

COI / REV : 14.7%

COI / REV : 14.9%

*Excluding IFRS3 impact

In € million

91.4

+3.8+21.8 +1.6

-13.4

105.1

0

20

40

60

80

100

120

140

EBITA H1 2013/2014

Conversion Transaction Chge in Scope

Organic Growth

EBITA H1 2014/2015

�Group transformation plan

� Evolution of the management model towards more centralization

� Strengthening operations and densifying reporting

Zodiac Aerospace: Emerging strongerZodiac Aerospace: Emerging stronger

� Strengthening operations and densifying reporting

� Transformation towards operational excellence

� Supported by external consultants

Page 23

Page 24

Gilles Debray

ZODIAC AIRCRAFT SYSTEMS

Zodiac Aerospace Maroc

Frédéric Arciet

Industrial Development

Thierry FévrierPurchasing

Grégory Blandet

Zodiac Aircraft Systems Toulouse

Pierre Calvairac

Defence Development

Claude Chiffaut

Zodiac Data

Systems

J.-M. Bétermier

Zodiac Water &

Waste Systems

Sébastien Weber

Zodiac Cabin &

Cockpit Systems

Jérôme Cerisier

Zodiac Electrical

Systems

Bruno Vazzoler

Zodiac

Fuel&Control

Systems

Philippe Parain

Legal Affairs

Thomas Renaudin

Zodiac Fluid

Management

Frédéric Duval

Administration & Finances

Arnaud Dermange

Lean & Continuous Improvement

J.-C. Dubail

ZODIAC AEROSPACE GROUP

Human Resources

Dominique Vareecke/Pascal Kertoubi

Focus Project

Juliette Cunaud

Zodiac Cabin

Controls

Frédéric Griffe

Zodiac Lighting

Solutions

Thierry Després

Zodiac Oxygen

Systems US

Ibrahim Youssef

Zodiac Water &

Waste Aero Systems

Sébastien Weber

ZIPS

Eli Liebermann

ZAA

John Stuart

Zodiac On Board

& Testing

Cécile Dubrovin

Zodiac Space

& Stations

Noël Barreau

Zodiac

Communication

& Monitoring

G. Delbecque

PPP

Jean-Marc Lemaître

Zodiac Sensing &

System

Management

Philippe Parain

Zodiac Fluid

Equipment

Daniel Hernandez

Zodiac Hydraulics

Laurent Quévat

Zodiac Aero Duct

Systems

Emmanuel Omont

ENVIRO Systems

Paul Campbell

Zodiac Electrical

Power Systems

Eric Cotelle

Zodiac Cockpit &

Lighting Systems

Jérôme Ramé

Zodiac Fuel &

Inerting Systems

André Gauthier

Zodiac Oxygen

Systems EU

J. Casadamont

Zodiac Actuation

Systems

Philippe Catel

Zodiac Train

Systems

Hans Wörmcke

People

STRATEGYTECHNOLOGY,

R&D =

InnovationOPERATIONAL

PLANSMARKETING

EconomicalPerformance

Market & ProductsPosition =

Growth

High Level Management ProcessHigh Level Management ProcessHoshin Kanri

STRATEGY MUST FLOW INTO OPERATIONS

Customer Satisfaction1) Quality

2) On Time 3) Cost Reduction

PRODUCTDEVELOPMENT

PRODUCTIONSALES

ADMINISTRATION

PRODUCT FLOW, DRIVEN BY CUSTOMER SATISFACTION

FEED-BACK LOOP: INFORMATION, ANTICIPATION & PLANNIN G

People

OPERATIONS

Performance

LEAN LOOP

Customer

Satisfaction

Economical

Performance

People

Development

A1 Quality & Reliability

A2 OTD

A3 Customers ratings

A4 In Service technical issues

E1 Fit (Person vs Position)

E2 Training

E3 Opportunities & Growth

E4 Well Being / Satisfaction

E5 Health,Safety & Environment

E6 Communications & Events

HK HK PerformancePerformance System System 5 5 Base Objectives and KPIs Base Objectives and KPIs

Performance

Growth

InnovationB1 Sales Budget

B2 Win/Lost ratio

B3 External Growth

B4 Business Plan

A4 In Service technical issues

C1 Ebita

C2 Working Capital

C3 Productivity

C4 Lean Assessment

C5 ERM

D1 Innovation Roadmap

D2 R&T Costs

D3 IP / Patents

D4 NPI

Supply Chain Vision Supply Chain Vision

• Strategies Alignment

• Rationalization of Supply Base

• Partnership and Long Term collaboration

• Operational Excellence• Operational Excellence

• Industrial Performance (Competitiveness)

• Innovation Initiatives and Capabilities (New Technologies)

• Continuous Improvement mindset