2010 ANNUAL REPORT An alphabet Safran is a leading international high-technology group and comprising letters a Tier-1 supplier of systems and equipment for aerospace, formed by products and components defense and security. Operating worldwide, the Safran group from our three core businesses: this has more than 54,000 employees and generated sales of graphic language, 10.8 billion euros in 2010. Through its global presence Safran invented by Safran, refl ects the passion not only enhances its competitiveness, but also builds industrial for high technology shared by over and commercial relations with the world’s leading prime contractors 54,000 Safran employees throughout and operators, while providing fast local service to customers the world. around the world. Working alone or in partnership, Safran holds world or European leadership positions in its core markets.
SAFRAN GROUP STRATEGY RESEARCH DEVELOPMENT IMPROVEMENT AEROSPACE AIRCRAFT DEFENSE – SECURITY HUMAN CORPORATE 02 MESSAGE FROM THE CEO 14 & TECHNOLOGY 22 INITIATIVES PROPULSION EQUIPMENT 42 RESOURCES RESPONSIBILITY 04 CORPORATE GOVERNANCE 18 28 34 38 46 52 HEALTH, SAFETY, 06 SAFRAN AT A GLANCE ENVIRONMENT 08 FINANCIAL AND OPERATING 54 PATRONAGE HIGHLIGHTS 56 BOAT SPONSORSHIP 12 INVESTOR INFORMATION
1 MESSAGE FROM THE CEO
“Even stronger and more 2010 was much more than just a year of aircraft. In the Defense sector, our optronics At the same time, we continue to build integrated, Safran is ready transition for Safran. It also marked the end equipment scored major business wins, while and perfect our organization. We are of a diffi cult period, as the rebound in air traffi c our security business continued to grow at a pooling our support functions, and we have to pursue its growth under was confi rmed and our customers reaffi rmed sustained pace, in line with Safran’s corporate rolled out a new visual identity. With full con- optimum conditions.” their confi dence in us. Safran is now stronger, strategy. Our selection on the vast Indian fi dence in the dynamic performance of our and is ready to pursue its development under program to assign every resident a unique markets, plus signifi cant investment capacity, JEAN-PAUL HERTEMAN
MESSAGE FROM THE CEO optimum conditions. biometric identifi cation number shows that we we are modernizing our industrial facilities in have the capabilities needed to meet our depth. For example, we opened four major All of the Group’s businesses recorded ambitious goals. This is the largest program plants in 2010, both in France and abroad. good performance, with certain emblematic of its type in the world, covering more than achievements that are worth emphasizing. The 1.3 billion persons. We are also pursuing our Sure of our business model and our highlight in the aerospace propulsion market outstanding people, and with a clear vision 2010 ANNUAL REPORT targeted acquisition policy, most recently with was the confirmed breakthrough of the the planned addition of L-1 Identity Solutions. of market trends, Safran expects sales to
SAFRAN LEAP-X, successor to the CFM56, as the increase in 2011 by at least 5%, while our
powerplant of choice on single-aisle jetliners. Safran’s performance has recorded a recurring operating income will advance at The propulsion system developed by Safran clear improvement, once again demon- least 20%. and partner GE has already been chosen for strating the strength of our business the Comac C919, built in China, and for the model. Our sales increased 3% last year to JEAN-PAUL HERTEMAN Airbus A320neo. At the same time, our nearly 11 billion euros, and our operating Chief Executive Offi cer, Safran acquisition of SNPE Matériaux Energétiques income rose by 20%. Each of our businesses, (SME) will enable us to develop a global supported by the highly effective Safran+ champion in solid propulsion for space. The improvement program, contributed to these Aircraft Equipment branch confirmed its good results. Our share price refl ects investor recovery, and has reorganized to meet the confi dence in the Group’s fundamentals: in challenges facing us in the coming decades, fact, we practically doubled our stock market in particular the advent of “more electric” valuation during the year.
2 3 GOVERNANCE AT DECEMBER 31, 2010
SUPERVISORY BOARD EXECUTIVE BOARD
The Safran Supervisory Board met eight times in 2010, in particular to approve the consolidated Jean-Paul Herteman, Chairman and non-consolidated fi nancial statements and to read the Executive Board’s quarterly Olivier Andriès, Executive Vice President, Defense - Security reports. It comprises 17 members. Dominique-Jean Chertier, Executive Vice President, Social, Legal and Institutional Affairs Xavier Lagarde, Executive Vice President, Quality, Audit and Risk Management Francis Mer, Chairman Yves Leclère, Executive Vice President, Aircraft Equipment Michel Lucas, Vice Chairman Ross M CInnes, Executive Vice President, Economic and Financial Affairs Luc Oursel (representing the company Areva) – Pierre Aubouin – Christophe Burg – François de Combret – Marc Ventre, Executive Vice President, Aerospace Propulsion Armand Dupuy – Jean-Marc Forneri – Patrick Gandil – Yves Guéna – Christian Halary – Shemaya Lévy – Michèle Monavon – Jean-Bernard Pène – Jean Rannou – Michel Toussan – Bernard Vatier
SUPERVISORS: Georges Chodron de Courcel – Pierre Moraillon
GOVERNMENT COMMISSIONER: Louis-Alain Roche GOVERNANCE
SUPERVISORY BOARD COMMITTEES 2010 ANNUAL REPORT The Supervisory Board has designated three committees to prepare its discussions, spotlight major issues and submit proposals. SAFRAN
STRATEGY COMMITTEE AUDIT COMMITTEE APPOINTMENT The Strategy Committee gives its opinion on The Audit Committee examines fi nancial state- AND REMUNERATION COMMITTEE the Group’s major strategic objectives and the ments and accounting procedures. In addition, The Appointment and Remuneration development policy proposed by the Executive it reviews requests submitted by the Committee assists the Supervisory Board in Board. It examines plans for strategic agree- Management Board to the Supervisory Board selecting members and corporate offi cers, and ments and partnerships, as well as acquisi- for authorizations concerning signifi cant acqui- draws up recommendations concerning the tions and operations affecting the Group’s sitions or divestments, as well as capital compensation of corporate officers. The CORPORATE OFFICERS L structures. Since April 14, 2010, the commit- increases. The committee has fi ve members: committee has six members: Michel Lucas tee comprises five members: Francis Mer Shemaya Lévy (chairman), Pierre Aubouin, (chairman), Pierre Aubouin, Christophe Burg, Jean-Paul Herteman , Chief Executive Offi cer Jean-Pierre Cojan, Executive Vice President, Strategy and Development (chairman), Pierre Aubouin, Christophe Burg, Michel Lucas, Jean Rannou and Michel François de Combret, Jean-Marc Forneri and Olivier Andriès, Executive Vice President, Defense – Security Xavier Lagarde, Executive Vice President, Quality, Audit and Risk Management Luc Oursel and Jean Rannou. Toussan. Bernard Vatier. Emeric d’Arcimoles, Executive Vice President, International Affairs Yves Leclère, Executive Vice President, Aircraft Equipment
Dominique-Jean Chertier, Executive Vice President, Social, Ross MCInnes, Executive Vice President, Economic and Financial Affairs Legal and Institutional Affairs Marc Ventre, Executive Vice President, Aerospace Propulsion
4 5 CORPORATE GOVERNANCE AS OF APRIL 21, 2011 BOARD OF DIRECTORS CORPORATE MANAGEMENT
Safran’s Annual General Meeting of Shareholders was held on April 21, 2011 at L’Espace Grande Arche, Paris-La Défense, under the chairmanship of Francis Mer, Chairman of the Supervisory Board. The meeting approved the change in corporate governance to a structure solely based on a Board of Directors, and appointed the following members of the Safran Board of Directors:
Jean-Paul Herteman, Pierre Aubouin Xavier Lagarde Chairman and CEO Marc Aubry Michel Lucas Jean-Paul Herteman, Giovanni Bisignani Elisabeth Lulin Francis Mer, Chairman and CEO Vice Chairman Christophe Burg Laure Reinhart Jean-Lou Chameau Michèle Rousseau Odile Desforges Board Advisor: Jean-Marc Forneri Caroline Grégoire Sainte Marie Christian Halary
This type of corporate governance offers a more streamlined organization than the previous structure (15 members instead of 20), and is also more diversifi ed, since it now includes fi ve women on the Board, as well as two international fi gures.
Dominique-Jean Chertier, Ross McInnes, Marc Ventre, Deputy Chief Executive Offi cer / Deputy Chief Executive Offi cer / Deputy Chief Executive Offi cer / Corporate Offi ce Finance Operations
BOARD COMMITTEES
The Board has designated three committees to prepare its discussions, spotlight major issues and submit proposals. Along with the change in corporate governance, Safran has also modifi ed its corporate management structure. The aim is to continue to knock down operational barriers between Group companies, by creating an Operations division, and to further energize innovation across all entities by creating a Transformation division. STRATEGY AND MAJOR AUDIT AND RISK NOMINATION AND PROJECTS COMMITTEE MANAGEMENT COMMITTEE REMUNERATION COMMITTEE
The Strategy and Major Projects The Audit and Risk Management The Nomination and Remuneration Committee issues opinions on Committee examines fi nancial Committee assists the Board the Group’s major strategic statements and monitors questions in selecting members and objectives and the development concerning the generation and corporate offi cers, and draws up policy proposed by corporate control of fi nancial and accounting recommendations concerning management to the Board information. In addition, it oversees the compensation of corporate of Directors. the effi ciency of the company’s offi cers. Committee members: Francis Mer internal control and risk management Committee members: Michel (Chairman), Pierre Aubouin, systems. Lucas (Chairman), Pierre Aubouin, Giovanni Bisignani, Christophe Committee members: Jean-Marc Giovanni Bisignani, Christophe Burg, Odile Desforges, Xavier Forneri (Chairman), Pierre Aubouin, Burg and Francis Mer. Lagarde and Laure Reinhart. Elisabeth Lulin, Michèle Rousseau Jean-Pierre Cojan, Bruno Cotté, Yves Leclère, Philippe Petitcolin, and Caroline Grégoire Sainte Marie. Executive Vice President / Executive Vice President / Executive Vice President / President / Strategy International Transformation Defence-Security COMPANY CHAIRMEN
Pierre Fabre Olivier Andries Philippe Schleicher Chairman and CEO, Chairman and CEO, Chairman and CEO, Snecma Turbomeca SME
Jean-Luc Engerand Yves Prete Vincent Mascré Chairman and CEO, President and CEO, Chairman and CEO, Snecma Propulsion Solide Techspace Aero Aircelle
Alain Sauret Olivier Horaist Karen Bomba Chairman and CEO, Chairman and CEO, Chairman and CEO, Messier-Bugatti-Dowty Hispano-Suiza Labinal
Philippe Petitcolin Jean-Paul Jainsky Chairman and CEO, Chairman and CEO, Sagem Morpho
SAFRAN 2, boulevard du Général-Martial-Valin – 75724 Paris Cedex 15 – France Phone: +33 (0)1 40 60 80 80 www.safran-group.com SAFRAN AT A GLANCE
AEROSPACE PROPULSION AIRCRAFT EQUIPMENT DEFENSE - SECURITY
€5,604 MILLION €2,834 MILLION DEFENSE SECURITY SALES SALES €1,240 MILLION €1,041 MILLION 59% SALES SALES COMMERCIAL 50% AIRCRAFT ENGINES LANDING SYSTEMS 12% 25% 52% MILITARY ENGINE SYSTEMS OPTRONICS AIRCRAFT ENGINES AND EQUIPMENT 55% 41% IDENTIFICATION 18% 22% AVIONICS HELICOPTER ENGINES ELECTRICAL SYSTEMS 24% AND ENGINEERING 7% E-DOCUMENTS 11% ELECTRONICS BALLISTIC MISSILE 3% AND SAFETY-CRITICAL 21% AND SPACE PROPULSION OTHER EQUIPMENT SOFTWARE DETECTION SAFRAN AT A GLANCE 2010 ANNUAL REPORT SAFRAN
COMMERCIAL AIRCRAFT ENGINES LANDING GEAR HELICOPTER FLIGHT CONTROLS BIOMETRIC ID DOCUMENTS No. .1 worldwide (mainline commercial jets with over 100 seats, No. 1 worldwide No. 1 worldwide No. 1 worldwide in partnership with GE) WHEELS AND CARBON BRAKES INERTIAL NAVIGATION AUTOMATED FINGERPRINT IDENTIFICATION SYSTEMS (AFIS) MILITARY AIRCRAFT ENGINES No. 1 worldwide (mainline commercial jets with over 100 seats) No. 3 worldwide No. 1 worldwide No. 4 worldwide No. 1 in Europe AIRCRAFT ENGINE NACELLES COMPUTED TOMOGRAPHY EXPLOSIVE DETECTION SYSTEMS HELICOPTER TURBINE ENGINES Top two worldwide OPTRONIC SYSTEMS No. 1 worldwide No. 1 worldwide No. 1 in Europe AIRBORNE POWER ELECTRONICS SPACE ENGINES A world leader TACTICAL UAVS No. 2 worldwide in liquid propulsion No. 1 in Europe AIRCRAFT WIRING No. 1 in Europe for solid propulsion A world leader
6 7 2010 FINANCIAL AND OPERATING HIGHLIGHTS
Safran posted adjusted sales of 10.8 billion euros for 2010, up 3% over SALES 2009. Adjusted recurring operating income came to 878 million euros, (millions of euros) 10,760 equal to 8.2% of sales. This result was based on a hedging rate of 10,448 Safran’s consolidated sales increased $1.44/euro, slightly more unfavorable than in 2009. One-time expenses, moderately in 2010, to 10,760 million euros, all related to the costs of mergers and acquisitions, amounted to 13 million from 10,448 million euros in 2009, for a growth rate of 3%. On an organic basis, Group sales euros, and adjusted operating income was 865 million euros. decreased slightly, by 1%. The Group’s share of adjusted net income jumped 29% over the previous year to 508 million euros, or 1.27 euros per share.
2009 2010 FINANCIAL AND OPERATING HIGHLIGHTS
SALES BY BUSINESS SECTOR
The 312 million euro rise in sales is primarily due to an increase of more than 15% in defense business, especially in optronics equipment, and the security sector, mainly due to acquisitions.
2010 ANNUAL REPORT While the sale of original equipment for aircraft declined somewhat, mainly due to a late ramp-up in Airbus A380 and Boeing 787 production, the sales generated by services remained stable. 1,041 SAFRAN SALES BY SECURITY BUSINESSES 904 (millions of euros) 695 10% 52% Between 2007 and 2010, the 481 Sales restated according SECURITY compound average growth rate AEROSPACE to 2008 scope of consolidation was about 15%. Including the PROPULSION (excluding electronic payment acquisitions of Printrak and GE business) and excluding Ivory Homeland Protection in 2009, Coast business 12% the average growth rate would 2007 2008 2009 2010 Sales from acquisitions DEFENSE be about 21%. (Printrak, GE Homeland Protection) 26% AIRCRAFT EQUIPMENT
8 9 NET INCOME – GROUP SHARE NET PROFIT PER SHARE OPERATING INCOME NET CASH POSITION NET INCOME reduction of 317 million euros in working capital (adjusted data, millions of euros) (euros) (millions of euros) (millions of euros) The Group’s share of adjusted net income requirements. The Group profited from a rose by 29% on an annual basis. It stood at favorable change in its cash position thanks to €1 BILLION 508 million euros for 2010, or 1.27 euros per business agreements with aircraft manufacturers, 878 24 worth of acquisitions since 2008 508 1.27 share, compared with net income of 395 the impact of economic stimulus measures by 395 0.99 729 million euros on a restated basis (0.99 euros the French government, which accelerated the 2009 2010 per share) for 2009. repayment of certain tax credits, and a signifi cant €1.2 BILLION recovery of receivables. With a gross cash invested in R&D, equal to nearly 11% of BALANCE SHEET AND CASH POSITION position of 2.1 billion euros and confi rmed, non- sales, including 637 million euros self- At December 31, 2010, the Group’s net drawn credit facilities of 2.4 billion euros at fi nanced. cash position stood at 24 million euros, December 31, 2010, Safran has confi rmed its Over compared with a net debt of 498 million euros fi nancial development capacity. a year earlier, for a very signifi cant improvement €300 MILLION of 522 million euros. The healthy generation of 2009 2010 2009 2010 2009 2010 (498) invested in production facilities, free cash fl ow, at 934 million euros, was the including the inauguration of four major new result of good operational profi tability and a plants in 2010. FINANCIAL AND OPERATING HIGHLIGHTS
EMPLOYEES
SHARP RISE IN DIVIDEND With exports accounting for 80% of its business, Safran in a major international group, although (euros) its roots are still largely in France: 64% of its workforce is based in France. 2010 ANNUAL REPORT The proposed payment of a dividend of
SAFRAN €0.50/share is subject to a vote by the 0.50 Annual General Meeting of Shareholders on April 21, 2011. The planned total 0.38 TOTAL EMPLOYEES EMPLOYEES BY JOB TYPE EMPLOYEES BY REGION payout will be about 200 million euros.
0.25 54,900 54,300 64% FRANCE 16% AMERICAS 11% 51% EUROPE PRODUCTION (outside France) 2008 2009 2010 20% 6% 2009 2010 R&D ASIA-PACIFIC 29% 3% OTHER AFRICA & MIDDLE EAST
10 11 Safran gives shareholders clear, complete The Annual General Meeting of Shareholders INVESTOR INFORMATION and accessible information in line with their allows shareholders to discuss issues with requirements, no matter what their level of fi nancial corporate management and ask questions. The expertise. Specialized teams at Safran create meeting held on May 27, 2010 included an 2010 information channels and organize meetings to exhibition of Safran’s products and technologies, establish relations of mutual trust, based on local refl ecting its technological excellence in different contacts. In 2010, these teams revamped the markets. This exhibition showcased the broad fi nancial information voice server to enrich its variety of the Group’s business sectors through content. It is overseen by management teams three stands, dedicated to aircraft engines and from the Group’s investor relations department. equipment, defense and security. SAFRAN INVESTOR RELATIONS CHANGES IN THE SHAREHOLDING STRUCTURE 2, boulevard du Général Martial Valin, Membership in the Shareholders Club is open Safran also organizes regular meetings with 75724 Paris Cedex 15, France Areva’s stake in Safran was significantly SAFRAN SHAREHOLDERS SAFRAN SHAREHOLDERS to all individual shareholders. They receive regular fi nancial analysts and institutional investors reduced, from 7.4% to 2%. For Safran, this AT DECEMBER 31, 2009 AT DECEMBER 31, 2010 information about Safran, in particular through the from France and abroad, during presentations of Investor and Analyst contact helps increase the number of shares available Shareholders Newsletter, which is available online, fi nancial results, as well as special conferences Phone: + 33 (0)1 40 60 83 53 to the public. 30.2% 30.2% and was published more frequently in 2010. Visits and seminars. We also organize roadshows and email: [email protected] FRENCH STATE FRENCH STATE to Group plants are also organized, and are open individual meetings, mainly in Europe and the to all club members. In 2010, six half-day visits United States, after the publication of annual and Individual shareholders and 7.4% 2% allowed more than 160 shareholders to get a half-year results. Shareholders Club contact AREVA AREVA close-up view of the Group’s operations. N° Vert : 0 800 17 17 17 20.1% 16% email: [email protected] EMPLOYEES EMPLOYEES 4.2% 4.2% TREASURY SHARES TREASURY SHARES 38.1% 47.6% PUBLIC PUBLIC INVESTOR INFORMATION
SAFRAN SHARE PRICE: JANUARY 1 TO DECEMBER 31, 2010
Safran CAC 40 % increase 2010 ANNUAL REPORT
SAFRAN 110 €26.50 100 90 REPAIRING ENGINE PARTS +93.57 % AT THE SUZHOU PLANT 80 IN CHINA 70 60 50 2011 AGENDA 40 30 FINANCIAL AGENDA THE SAFRAN SHARE 20 Annual General Meeting of Shareholders The Safran share is listed in Compartment A of Euronext Paris, April 21, 2011 and is eligible for Deferred Payment Service (SRD). 10 Publication of 2011 Q1 results Name: SAFRAN 0 3,804.78 POINTS April 28, 2011 ISIN code: FR0000073272 -10 -3.34 % Publication of 2011 H1 results Abbreviation: SAF July 28, 2011 -20 Index: CAC Large 60 (starting March 21, 2011) JAN. FEB. MAR. APR. MAY JUNE JUL. AUG. SEPT. OCT. NOV. DEC. 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010
12 13 STRATEGY
ACQUISITION OF L-1 2010 ANNUAL REPORT
SAFRAN A WORLD LEADER IN SECURITY SOLUTIONS
STRATEGY Safran and L-1 Identity Solutions, a leader positions in the American market, giving it in this market in the United States, the complete array of technologies needed NURTURING announced on September 20, 2010 that by any major player in the security sector. they had signed an agreement providing for Already the world leader in fingerprint the acquisition by Safran of L-1’s biometric recognition, Safran will also acquire this GROWTH solutions, access control, secure ID status in iris recognition, and will bolster its document and enrollment service production capacity for secure ID documents. businesses, for a total of $1.09 billion, in From the business standpoint, the acquisition cash. This operation, which was to be facilitates access to the huge driver’s license Safran, as a world leader in high technology, applies an ambitious Research finalized in the first half of 2011 (pending market in the United States, which is & Technology (R&T) policy designed to ensure vigorous organic growth authorization by American authorities), will managed by each state individually. create a world leader in high-tech solutions through increasingly integrated solutions. If needed, this strategy is backed for the booming biometric security market. Morpho will subsequently have the essential by a targeted mergers & acquisitions policy, to provide or strengthen certain technologies and market access that will With the addition of L-1, Safran will increase enable it to meet its long-term strategic technological building blocks. its security business sales by one-third. It objective of making security the Group’s will also help the Group consolidate its third pillar. FINGERPRINT RECOGNITION
14 15 THE AIRBUS A320NEO WILL BE POWERED BY LEAP-X ENGINES
1979 2016 1.09 100 fi rst fl ight of a planned fl ight of billion dollars million euros CFM56 engine fi rst LEAP-X invested in the invested in the engine acquisition of L-1 new Turbomeca plant
LEAP-X CHOSEN ACQUISITION OF SNPE INAUGURATION OF THE FOR AIRBUS A320NEO MATÉRIAUX ENERGÉTIQUES JOSEPH SZYDLOWSKI PLANT
THE NEW-GENERATION EUROPE CONSOLIDATES ITS SOLID INDUSTRIAL EXCELLENCE, AIRCRAFT ENGINE PROPULSION INDUSTRY FRENCH STYLE
STRATEGY On December 1, 2010, Airbus selected the During the third quarter of the year Safran Europe a structured space propulsion industry, Our ongoing international development does LEAP-X as one of the engines to be offered on announced its plan to set up a framework including the production of propellants and not mean that we have stopped investing in its A320neo. After having been chosen by agreement for industrial and commercial rocket motors within the same group. In fact, France. Safran continues to invest in state-of- Chinese aircraft manufacturer Comac as the collaboration with SNPE, bringing to fruition a that is exactly how all of Safran’s main the-art industrial facilities, as shown by INAUGURATION sole Western powerplant on the new C919 project that was considered a pivotal strategic competitors in this market are already organized. Turbomeca’s new Joseph Szydlowski plant in OF THE NEW jetliner, the LEAP-X is well on its way to replicate objective for many years, namely, to strengthen The resulting industrial and contractual Bordes, southwest France, inaugurated last TURBOMECA PLANT
2010 ANNUAL REPORT the success of its predecessor, the CFM56, the solid rocket motor industry in France and simplifi cation will signifi cantly boost industry June by French President Nicolas Sarkozy. which has become the benchmark in aircraft Europe. Solid propulsion is a key to both competitiveness, and will help both the Ariane This new plant represents a total investment
SAFRAN propulsion over the last 25 years. The shift to missiles and launch vehicles, and the two launcher and tactical missiles win new contracts. of 100 million euros. the new generation is already under way: the groups already team up on propulsion systems The restructured solid propulsion industry, now Turbomeca’s new plant will reduce production LEAP-X will enter service in 2016 on both the for France’s nuclear strategic missile, the M51, grouped within Safran, will comprise nearly cycles by 50% and bring design and production new version of the Airbus A320 and on the and for Europe’s Ariane 5 launcher. 3,000 employees, a Research & Development teams closer together. Entirely “eco-designed”, Chinese airliner. The agreement between the two groups unit with more than 600 scientists and engineers, it exceeds the most stringent Health, Safety provides for the acquisition by Safran of SNPE and total sales estimated at nearly 600 million and Environment (HSE) standards, and is a Matériaux Energétiques (SME) and its euros in 2011. model of sustainable development. It was subsidiaries, including 50% of Roxel, a specialist conceived with the well-being of future in tactical propulsion, and 40% in Regulus, a generations in mind, as well as the long-term subsidiary specialized in solid rocket motor viability of the enterprise, by anticipating the propellants. Pending the finalization of more restrictive environmental regulations to government procedures, expected in the fi rst come. The plant also ensures the company’s half of 2011, this project should enable Safran long-term presence in this region, supporting to establish its position as the world’s second both employment and skills development, and leading supplier of solid propulsion systems. reflects the Group’s commitment to the The new industrial organization will also give ongoing growth of the world’s leading producer of turbine engines for helicopters.
ARIANE 5 LAUNCH IN KOUROU, FRENCH GUIANA
16 17 RESEARCH & TECHNOLOGY 2010 ANNUAL REPORT SAFRAN RESEARCH & TECHNOLOGY
RISING TO TOMORROW’S INNOVATION ANCHORED IN by non-destructive testing (computed New R&D center CROSS-FUNCTIONAL COMPETENCIES tomography, ultrasound inspection, etc.), The new François Hussenot center Safran’s Research & Technology activities are benefi t from broad synergies between these in Massy, near Paris, consolidates CHALLENGES organized according to a model that fosters teams. Since being created, the Safran group the Group’s strengths in electronics the development of synergies. For instance, has maintained close ties with academic and safety-critical software within we have set up a network of experts focused research. In 2010 we started a new the Safran Electronics division, on a dozen main disciplines: mechanics, collaboration with the Leti lab at French forming a world-class R&D hub. Establishing a distinctive technological difference is one of the key aerodynamics, composite materials, alloys, atomic energy commission CEA, an applied competitiveness factors in Safran’s business sectors. To maintain our electronics, onboard software, sensors and research center for microelectronics and signal processing, systems engineering, etc. information technology, to work on infrared leadership in an environment characterized by increasing global competition, Several research centers in France and sensors using indium antimonide (InSb) the Group applies a strategy based on proactive Research & Technology. the United States, for instance, are working technology. on signal processing and imaging techniques. To convert our research investments into Safran’s products for defense optronics, intangible assets, Safran also actively pursues biometrics, explosive detection and critical a policy of fi ling for patents, with the total engine parts, whose quality is certified number in our portfolio increasing steadily.
18 19 ASSEMBLING INERTIAL NAVIGATION EQUIPMENT IN A CLEAN ROOM
5th 20% 450 1.2 leading French company of employees doctoral scientists billion euros invested in terms of patents published work on R&D work in Safran’s in R&D in 2010 in 2010 (426) research teams (53% self-fi nanced)
GREEN TAXIING: COMBINING ECOLOGY SIMPLER SECURITY CHECKS Tomorrow’s ceramic AND ECONOMY Morpho’s innovative X-ray diffraction low-pressure turbines Safran has developed a concept that will technology will revolutionize the luggage The use of composite materials is allow aircraft to taxi, before takeoff and after inspection process during passenger check-in gradually being extended to the landing, without using their jet engines. at airports, by allowing liquids and gels to be entire aircraft, including the engine. Electric motors powered by the auxiliary inspected, while increasing the detection rate In July 2010, Safran tested the fi rst power unit (APU), already installed on all and decreasing the number of false alarms. prototype of a low-pressure turbine planes, will be added to each wheel in the This highly effective technology provides a fi tted with ceramic matrix composite RESEARCH & TECHNOLOGY main landing gear, and controlled from the precise identifi cation of materials contained blades. Based on the 3D woven cockpit. This concept will provide fuel savings in luggage, based on their crystal or molecular technology developed jointly by TAXIING of up to 5%, while signifi cantly reducing CO 2 structure, offering unprecedented detection Snecma and Snecma Propulsion and NOx emissions, largely offsetting the performance. Many other technical advances Solide (the Group’s center of additional fuel used due to the weight of the are behind the design of a fast, compact excellence in composite materials), system. Furthermore, since the jet engines system, especially well suited to these these blades are a world fi rst, and
2010 ANNUAL REPORT won’t operate while the plane is on the ground inspection stations. a real technology breakthrough that the risk of ingesting debris is greatly reduced. heralds the new generation of
SAFRAN A demonstrator is planned for 2012, with the turbines to be incorporated in system entering service in mid-2016. airplanes that will hit the market towards 2018.
3D WOVEN COMPOSITE BLADES FOR LEAP-X In December 2010, Snecma carried out the fi rst simulated blade rupture test on a new- generation fan module. This test is a major milestone in the certifi cation of any jet engine. The fan blades and casing are made of a 3D woven composite material, using the resin transfer molding (RTM) process. RTM involves the injection of a liquid resin between a rigid mold and countermold, to produce 3D composite parts that are both light and strong, and very practical production processes have been developed as well. RTM woven composites are one of the major technological advances incorporated on the new LEAP-X engine. TESTING FAN BLADES ON THE LEAP-X ENGINE
20 21 DEVELOPMENT 2010 ANNUAL REPORT SAFRAN DEVELOPMENT
UNIFIED AND A UNIFIED WHOLE This strategy also involved, for example, the New visual identity In 2010 Safran rolled out a new visual identity, coordinated implementation of a Group-wide The Group’s new visual identity designed to spotlight the value of the Group offset policy, along with the management of was unveiled during the Annual EFFICIENT GROWTH as a unifi ed whole built on its constituent our internal export control and trade General Meeting of Shareholders companies. At the same time, we further compliance processes. A new company was in 2010. It is based on a modernized strengthened the coordination of our created in 2010, Safran Mexico. The aim of Safran logo and a “descriptor” international development, based on a unifi ed this type of entity is to bolster our local specifying the three core Safran continues to expand, while also building our image and bolstering image and with the aim of greater effi ciency. presence with regional customers, and pool markets. our structure as a major global enterprise. In the field, we carried out a number of various support functions. We also focused promotional actions for the Group, to support on rationalizing the Group’s businesses in the the development of our companies. This United States and India last year, while support was refl ected in close contacts with organizing major country-level seminars in local authorities and key personalities, Russia, Brazil, Mexico, India, Italy and the professional associations and think tanks. United Kingdom.
22 23 SMART CARDS FOR BANKING
Present More than Including in more than 54,000 25% 50 employees outside of Europe countries worldwide
EXPANDING FOUNDATIONS IN THE UNIQUE ID NUMBER PROGRAM IN With more than 1,000 employees, security is SECURITY INDIA already Safran’s largest production business The security sector has consolidated at a rapid Safran’s participation in the Indian program in India. Safran makes a wide range of pace over the last few years. Safran is now one to assign a unique identifi cation number to all personalized smart cards in the country for a of the top three providers of biometric solutions residents will accelerate the development of number of applications, including healthcare, in this market, and is No. 1 worldwide in the security market in Asia. The Group has biometric identifi cation, transport, banking automated fi ngerprint identifi cation systems therefore created a dedicated biometric and mobile phones. Safran’s Noida plant (AFIS). With the recent acquisition of L-1 Identity subsidiary, Sagem Morpho Security Pte Ltd., turns out one million smart cards a day, sold Solutions (pending approval by American and we have also teamed up with Mahindra not only in India, but also exported to many authorities), Safran will become the world leader Satyam, one of the world’s leading providers other countries in Asia, Africa and the Middle DEVELOPMENT in biometric ID solutions and the detection of of information services. The vast Indian ID East. dangerous products, adding expertise in critical program is unprecedented worldwide, since iris recognition technologies and bolstering its it involves the creation and management of a capacities in enrollment systems. The acquisition biometric database eventually covering 1.4 ENROLLING RESIDENTS IN THE INDIAN ID PROGRAM of Printrak and GE Homeland Protection in billion people – a major breakthrough in the 2009, along with L-1 today, confi rm the Group’s security market. Last December, Safran was
2010 ANNUAL REPORT transatlantic presence. In addition to adding the fi rst company to contribute its technology new technological building blocks, the for the deduplication of biometric files,
SAFRAN incorporation of L-1 will also facilitate access to enabling the fi rst unique ID number to be the American market, which now accounts for issued in India. about 40% of global security business.
A strategic facility in Mexico Mexico is located in a very strategic position near the United States, the world’s leading aviation market. In March 2010, Mexican President Félipe Calderon and Safran CEO Jean- Paul Herteman inaugurated the Group’s new site in Querétaro. This site houses two plants, which make components for engines and landing gear used on both Boeing and Airbus jetliners. Already operating in Mexico for more than 20 years, Safran has confi rmed its position as the country’s leading aviation industry employer, with 3,000 employees, and consolidated WORKERS AT THE its strategic presence in this prestigious sector. QUERETARO PLANT IN MEXICO
24 25 FRENCH ROOTS, Countries with more GLOBAL FOOTPRINT than 10 employees. Safran has continually expanded to keep pace with the development of global business over the years, and now operates in more than 50 countries around the world. EUROPE 40,653 employees, 75 % of total workforce
NORTH AMERICA 8,053 employees, 15% of total workforce DEVELOPMENT NORTH AMERICA 8,053 employees
United States 4,330 AFRICA / Mexico 2,708 Canada 1,015
2010 ANNUAL REPORT MIDDLE EAST SOUTH AMERICA ASIA / PACIFIC 1,674 employees, SAFRAN 804 employees, 3% of total workforce 3,072 employees, 1% of total workforce 6% of total workforce
SOUTH AMERICA 804 employees
Brazil 703 Other 101
EUROPE AFRICA / ASIA / PACIFIC 40,653 employees MIDDLE EAST 3,072 employees France 34,482 Germany 990 1,674 employees India 1,623 U.K. 1,985 Russia 288 China 670 Morocco 1,336 Singapore 542 Belgium 1,448 Other 1,460 South Africa 246 Australia 179 Other 92 Other 58
26 27 IMPROVEMENT INITIATIVES 2010 ANNUAL REPORT SAFRAN IMPROVEMENT INITIATIVES REFINING OUR CONTINUOUS bought-in share of production costs; its Pooling procurement DYNAMIC IMPROVEMENT APPROACH internal share; and control over overhead, Non-production purchases have Safran’s improvement initiative was structural and administrative expenses. At been pooled through the creation of relaunched two years ago as Safran+, a label the same time, a major Group project a shared services center, called TRANSFORMATION that is now widely recognized throughout the focuses on reducing our working capital Safran Purchasing. With this new Group. Based on continuous improvement requirements and improving cash flow. structure, purchasing between efforts, the priority projects – coordinated at Another project aims to decrease the Group’s Group companies is now Group level and overseen by management exposure to euro/dollar exchange rate coordinated centrally, while Safran pursues its continuous improvement initiatives based on best teams at our companies – are deployed fl uctuations. companies have retained their practices from around the world. These large-scale projects, coordinated simultaneously across the Group, and aim To increase their effectiveness, heads of both operational responsibility for the to achieve breakthrough improvements. The improvement initiatives and Group projects purchase of components, products by the Group and applied to all of our units, underpin an approach based corresponding gains are spotlighted, to received special training in 2010, covering or services needed to make their on ongoing innovation and transformation. They target economic performance, make sure that the performance achieved in communications techniques, managing own products. each type of improvement action is visible. change and labor relations, and managing as well as fostering the full-fledged commitment of all employees to The four main improvement objectives are: transformation projects. continuous improvement. the development of service sales; the
28 29 THE “FINGER ON THE FLY” MOBILE FINGERPRINT RECOGNITION SYSTEM WON THE SAFRAN More than INNOVATION GRAND PRIZE IN 2010 1,900 1,000 250 11.4 Green Belts and Black Lean projects employees now improvement Belts, already certifi ed or launched or consolidated within Safran suggestions per person being trained, are leading completed in 2010 Purchasing and per year applied at projects at Safran Sagem Industries
MODERNIZATION OF GROUP LEAN-SIGMA, A MAJOR Supply Chain MANAGEMENT IMPROVEMENT LEVER Safran continues to optimize its Two types of actions run concurrently: The Lean-Sigma initiative continues to be a major supply chain. All Group companies continuous improvement initiatives, coordinated lever for improving the Group’s performance. now manage this proactive initiative, by Group companies within the scope of their Based on training Green Belts and Black Belts sharing common reference own progress plans, and breakthrough or even in these two productivity improvement standards that were drawn up to KEEPING OVERHEAD, disruptive concepts, embodied in several techniques, this initiative now counts nearly place daily supplier relations on a STRUCTURAL AND ADMINISTRATIVE COSTS projects deployed simultaneously across the 2,000 employees who are undergoing training more professional basis. Thanks to UNDER CONTROL IMPROVEMENT INITIATIVES Group and coordinated centrally. All Safran or have already been certifi ed – and they will lead actions targeting our suppliers, we entities share the common goals of improving improvements in production, engineering and have been able to reduce non- financial performance and stimulating support functions. quality in half since 2008, while at innovation, based on reference standards the same time improving on-time applied throughout the Group. In line with this COMPETITION DRIVES INNOVATION delivery performance by 30%. approach, various support functions are being Safran organizes a yearly competition that
2010 ANNUAL REPORT modernized to establish new operating modes rewards the best innovations in fi ve categories: and an enhanced service culture. For instance, Lean-Sigma, sustainable development,
SAFRAN since January 2010 a shared services center innovation in the fi eld, patented innovation, and has centralized payroll and personnel product, technology or service innovation. A management for 24,000 employees in France. Safran Grand Prize for Innovation recognizes the At the same time, we revamped our in-house most innovative idea of the year. university, creating Safran Corporate University The “innovation in the fi eld” award for 2010 was to support ongoing changes in our business jointly awarded by Safran and the business sectors and develop the skills and expertise of weekly L’Usine Nouvelle , while the prize for the more than 54,000 Group employees. Safran best Lean-Sigma project spotlighted the impact Corporate University focuses its training of a quality initiative set up in conjunction with a programs on the Group’s strategic challenges supplier. and priority skills development objectives for the entire workforce. This is just one way for us to unify our personnel around a shared corporate culture, identity and values. LEAN TRANSFORMATIONS The RTDI (research, technology, development More than 80 “Lean Transformations” have been launched in the last two years. and production engineering) project aims to These initiatives systematically focus on visual management and use a two-pronged improve all processes involved in getting a new approach: projects implemented locally by companies, in line with the improvement product to market by 30%. objectives defi ned by Safran; and others carried out at Group level, based on proposals by our companies. OPTIMIZING OUR SUPPLY CHAIN
30 31 AEROSPACE PROPULSION DEFENSE – SECURITSECURITYY 34 42 OUR THREE CORE BUSINESSES 2010 ANNUAL REPORT SAFRAN
Safran has organized its core businesses in three branches. The Aerospace Propulsion and Aircraft Equipment branches consolidate the companies dedicated to air and space. The Defense – Security branch consolidates operations concerning optronics, avionics and electronics for AIRCRAFT both civil and military markets, as well as biometric and detection solutions EQUIPMENT for the security market. 38
32 33 “The selection of the LEAP-X for the Airbus A320neo confi rms our success in 2009 when this engine was chosen to power the Comac C919. INTERVIEW The successor to the CFM MARC VENTRE, Executive Vice President, Aerospace Propulsion branch family is now well under way.”
How would you characterize the market in 2010? The rebound in air transport, already buoyant in emerging countries starting in 2009, spread worldwide. These favorable conditions underpinned a clear recovery in airlines’ fi nancial health. We have now emerged from the low AEROSPACE point in the business cycle.
How did the events of the past year PROPULSION impact Safran’s propulsion business? Spurred by the market recovery, we posted spectacular results at the Farnborough international airshow in July: more than 825 AEROSPACE PROPULSION orders for CFM56 engines, along with long-term maintenance contracts, worth over $7.3 billion at list prices. The orders booked in 2010 largely exceed our best-ever year for production.
In addition to this business success, was
2010 ANNUAL REPORT there another area where you were especially satisfi ed?
SAFRAN Our very good earnings, built on what is now a well established trend of continuous Safran’s aerospace propulsion activities cover the entire improvements in controlling costs and life cycle of propulsion systems – design, production, improving productivity. marketing, testing, support – for airplanes, helicopters, What diffi culties did you have to missiles and launchers, in the civil, military and space overcome last year? Spare parts orders for the CFM56 were lower markets. Engines built by Safran power many of the than in 2009, a cause for concern, but this was world’s leading aircraft and spacecraft. fortunately offset in part by our support business for military, helicopter and large turbofan engines. We also recorded a 16% rise in CFM56 spare parts sales from the third to the fourth quarter of the year. This indicates that the low point is now behind us, and that the recovery is solidly established, including for support services.
34 35 HELICOPTER POWERED BY AN ARRIEL ENGINE
5,604 million euros in sales
20,000
employees COMMERCIAL ENGINES: CFM56 MILITARY ENGINES: TP400 FLIGHTS, production business, Safran invested 100 CONTINUES TO MEET CURRENT NEEDS MRO CONTRACT million euros in the new Turbomeca plant in Air traffic grew 6.3% in 2010 over the The difficulties of the new A400M military Bordes, southwest France, inaugurated in June previous year, according to the International transport have now been overcome, and its 2010 by French President Nicolas Sarkozy. COMPUTER- Civil Aviation Organization (ICAO), due to a TP400 turboprop engine is continuing fl ight tests AIDED DESIGN (CAD) signifi cant rise in international traffi c and leading to certifi cation. The fourth A400M built MEETING AMBITIOUS GOALS IN SPACE ILLUSTRATION dynamic growth of domestic traffic in by Airbus made its fi rst fl ight in December, and On January 14, 2010, Ariane celebrated its 30th OF THE LEAP-X ENGINE emerging countries. While the LEAP-X the development fl eet logged more than 1,000 anniversary, and this success story continues AEROSPACE PROPULSION engine represents the future in aircraft flight-hours in 2010. During the year Safran today with Ariane 5. Safran is responsible for 9,000 propulsion, CFM56 engines continue to meet signed a fi ve-year contract with SIAé, the French propulsion systems on this European launcher, the current needs of Safran’s customers, as military aircraft MRO (maintenance, repair and with the Vulcain® 2 main-stage and HM7B Arriel engines delivered clearly shown by the large number of new overhaul) organization, covering the M53 (Mirage upper-stage cryogenic engines, along with the as of year-end 2010 contracts signed at the Farnborough airshow. 2000) and M88 (Rafale) engines, as well as the solid rocket boosters, in partnership with Avio. In June 2010, the European Aviation Safety TP400 (A400M) when it enters service. Including the six missions in 2010, Ariane 5 had
2010 ANNUAL REPORT Agency (EASA) certifi ed the SaM146 engine performed 41 successful launches in a row at THE AIRBUS MILITARY powering the Sukhoi Superjet 100 regional INAUGURATION OF BORDES PLANT December 31, 2010. A400M AIRLIFTER
SAFRAN jet, a decisive step forward in the promising The Arriel family of helicopter engines has Safran, the European leader in the design and career of this new aircraft. Mexican airline celebrated its 30 millionth fl ight-hour. Available construction of solid rocket motors, signed an Interjet ordered 20 Superjet 100s during the in 28 different versions, it holds a 60% share of agreement to acquire SNPE Matériaux 15% year, including fi ve on option. the market for helicopters with 700 to 900 shp Energétiques (SME), the European leader in (shaft horsepower) engines. Reflecting its propellants and energetic equipment. The new reduction in CO 2 emissions on the LEAP-X confi dence in its helicopter engine design and consolidated entity will be a world leader in solid propulsion for both space and defense applications. The M51 strategic missile, including propulsion and guidance systems by Safran, was fi red by a submerged submarine on the move for the fi rst time. Airbus selects the LEAP-X The LEAP-X, a new generation engine developed by CFM International, a 50/50 joint company 55 of Snecma (Safran) and GE, was selected by Airbus as one of the engines to be offered on the A320neo. This new aircraft could enter service in spring 2016, and will meet customers’ Ariane 5 launches priority requirements in terms of reliability, reduced fuel consumption and maintenance costs, as of Dec. 31, 2010 and environmental performance.
36 37 “With Safran Power and the Ampères research program, Safran really anticipated the ‘more INTERVIEW electric’ aircraft revolution. YVES LECLÈRE, Executive Vice President, Aircraft Equipment branch I am sure that we will be ready for the new generation What were the main developments for your branch in 2010? of single-aisle jets.” Above all, I would like to underscore the rebound in our economic performance. After three years of unrelenting efforts, we generated signifi cant cash fl ow. Our productivity gains are especially encouraging, and we will keep improving in this area.
AIRCRAFT What areas gave you the greatest satisfaction? The success of our nacelle and thrust reverser EQUIPMENT business, driven by the success of the new LEAP-X family, is very encouraging. Nexcelle and CFM confirmed their synergy, clearly proving Safran’s ability to provide its customers AIRCRAFT EQUIPMENT with an integrated propulsion system, including the engine, nacelle and thrust reverser. This capability proved to be especially relevant, because, after convincing Comac in late 2009, this proposal won over Airbus in 2010.
2010 ANNUAL REPORT Were there any disappointments last year?
SAFRAN Perhaps the term is a bit strong, but it’s true that delays in major aircraft programs including a Safran supplies a wide range of systems and equipment signifi cant number of our products impacted our for most of today’s leading aircraft, in particular nacelles sales growth.
and thrust reversers, landing and braking systems, and The companies Messier-Dowty, electrical power transmission, distribution and management Messier-Bugatti and Messier Services are going to merge: why now? equipment. Today, aircraft manufacturers want to work with solid Tier-1 partners, capable of delivering integrated, innovative solutions. In terms of service delivered to airlines, our future also depends on our ability to provide more comprehensive packages. Major opportunities are coming up in the next decade, so it’s the right time to create a world leader by grouping all functions that connect an airplane to the ground (i.e., landing, braking, steering) in a single entity.
38 39 NACELLES BY NEXCELLE WILL BE FITTED ON THE BOMBARDIER GLOBAL 8000 HIGH-END BIZJET
2,834 million euros in sales
19,000
employees SUCCESS IN THE NACELLE/THRUST Nexcelle will also be participating in another consumption by up to 5%. The landing gear on REVERSER MARKET major aircraft program, since its nacelles and single-aisle jets could be equipped with electric Last year was very promising for the future of thrust reversers will equip the GE TechX engine, motors to drive their wheels as early as 2016. THE INNOVATIVE ASSEMBLY LINE Group company Aircelle, which has a number selected for the new Bombardier Global 7000 Safran also continued to bolster its industrial FOR THE A380 of programs in its portfolio. Nexcelle, an equal and Global 8000 business jets. facilities in 2010. For instance, it expanded its NACELLE joint venture of Aircelle and Middle River Aircraft plant in Bidos, France, adding a new landing Systems (GE) has a very healthy order book. THE FUTURE OF LANDING AND gear assembly shop, and the new plant in The selection of the LEAP-X engine for both BRAKING SYSTEMS Querétaro, Mexico started operations. AIRCRAFT EQUIPMENT the Comac C919 and the Airbus A320neo also Safran is gearing up to keep pace with the fast- 20,500 benefi ts the Aircraft Equipment branch. evolving aviation market, by merging Messier- LABINAL AND SAFRAN POWER: These successes are based on innovations Dowty, Messier-Bugatti and Messier Services to TOWARDS MORE ELECTRIC AIRCRAFT aircraft fi tted with that call on composite materials, and on form an entity that will more effi ciently meet “More electric” aircraft simply means that the Safran landing gear exceptional work focusing on acoustic future needs. Furthermore, in response to traditional hydraulic and pneumatic systems performance, aerodynamics, electrically- increasing demand from operators to reduce will be replaced by electrical systems in the
2010 ANNUAL REPORT controlled thrust reversers and the “design to fuel consumption and CO 2 emissions, the Group upcoming generations of commercial jets. The cost” concept, which involves integrating cost is working on a concept called “Green Taxiing”, new Safran Power entity, dedicated to this
SAFRAN factors right from the initial design phase. allowing aircraft to avoid using their jet engines fi eld, is now completely organized. In related while taxiing at airport, which will reduce fuel areas, Safran Engineering Services was created on March 1, 2010, as a single entity 13,000 that provides engineering services for design engines in service departments in the Group and for other major with Safran nacelles manufacturers.
An assembly line that will become an industry benchmark The A380 nacelle assembly line in Le Havre, France, marks a signifi cant breakthrough in 500 production: the same automated line is used to assemble four different versions of the nacelles used on the Airbus super-jumbo jet: for the two different engines offered on this aircraft, and kilometers of wiring with or without thrust reversers on each model. on an Airbus 380
LANDING GEAR ON A BOEING 787
40 41 “Our corporate strategy of making security the third pillar of the Group really came into INTERVIEW its own in 2010, with the OLIVIER ANDRIÈS, Executive Vice President, Defense – Security branch planned acquisition of L-1
What was the main development in 2010 for and the unique ID number your branch? program in India.” The announcement of the planned acquisition of L-1 Identity Solutions was undoubtedly the most important event last year. Following the acquisition of Morpho Detection in 2009, this transaction, pending approval by American authorities, is a new challenge for us. L-1’s businesses are an excellent fi t with our own, from both the commercial and technological viewpoints, and will strengthen our position as a major player in the global security DEFENSE market.
Could you briefl y describe the unique ID SECURITY number program in India? India has launched a vast program to assign each resident a unique identifi cation number – by far the largest program of this type in the world, since DEFENSE – SECURITY it will cover 1.4 billion persons, 15 times more than the largest biometric database to date. Morpho is one of the three companies chosen to take part in the fi rst phase of this program, covering some 200 million persons.
2010 ANNUAL REPORT And what were the highlights in your defense business last year?
SAFRAN First, the excellent performance of our optronics business, with sales up 38%, driven by our A major player in global security markets, Safran offers 2,281 subsidiary Vectronix and the many contracts a complete line of advanced technology products, it won from the U.S. Army. Also worth noting million euros were the successful fi ring tests of the laser- from personal identifi cation to luggage inspection, in sales guided AASM, as well as several successes in helping to protect people, identify criminals and avionics, including a number of certifi cations, such as the one for the electric brake software secure critical facilities. on the Boeing 787. We also call on our expertise in optronics, avionics Why is the X4 program so important for and electronics to give our customers high-tech Safran? systems and equipment for use on air, land and sea, Eurocopter’s planned X4 helicopter is the fi rst civil 13,000 rotorcraft with fl y-by-wire controls. In addition to in both civil and military markets. the development of a new engine, Safran has employees signed a tripartite agreement with Eurocopter and Thales for the development of the X4’s avionics suite, and we will be in charge of the flight controls.
42 43 DEFENSE SECURITY
3D ILLUSTRATION OF THE X4 HELICOPTER’S THE UNIQUE ID NUMBER COCKPIT PROGRAM IN INDIA
BUOYANT OPTRONICS BUSINESS environments in a single unit: daytime vision, ID BUSINESS SUCCESS TECHNOLOGIES RECOGNIZED One of the main highlights of 2010 was the thermal (nighttime) vision, range-fi nding, laser Safran was chosen to participate in the test WORLDWIDE buoyant performance of the optronics pointer, GPS and magnetic compass. phase of India’s unique ID number program, Safran maintained its position at the cutting business, especially for portable optronics which combines iris and fi ngerprint recognition edge of technology, winning several awards equipment, which recorded sales growth of REORGANIZATION for a population sample group of 200 million for the quality of its products and innovative DEFENSE – SECURITY 4,500 70%. Also worth noting are several major The 1,500 employees of Safran Electronics are 1,400,000 persons. In addition to this unprecedented solutions. For example, Safran was ranked fi rst JIM LR infrared business wins, including our selection by now grouped at the new François Hussenot passports issued project, Safran scored a number of major busi- by the National Institute of Standards and binoculars on order or French defense procurement agency DGA as plant in Massy, south of Paris, while the transfer in Albania ness wins, including the renewal of passports Technology (NIST) in the United States in an already in service in a prime contractor for the RIF-NG program, the of our electronics activities to Fougères is in the Netherlands, secure driver’s licenses in authentifi cation test of fi ngerprint recognition. number of countries new-generation warfighter radio and under way. North Carolina, and replacement of the Iris sys- At the Security Essen 2010 trade show, Safran information system, and an order for 1,175 In addition, the Tarbes plant’s work for the tem in the United Arab Emirates. won the innovation award for its sensor that
2010 ANNUAL REPORT new-generation JIM LR long-range infrared Megajoule Laser research facility was combines the analysis of vein patterns in binoculars. These multifunction binoculars give transferred to the ALCEN group. DETECTION: MEETING NEW THREATS fi ngers and fi ngerprints. More recently, Group
SAFRAN armed forces and security units the capability To respond to the emergence of new terrorist company Morpho won the “Sésames” award for day/night observation, detection and threats, Safran is developing innovative for its work to ensure the compatibility of SIM identifi cation of threats to a range of several 1,000 technologies to detect liquid explosives, as well cards with local wireless networks. kilometers. Compact and ergonomically as explosives in containers. The Group received pieces of luggage inspected designed, they include all functions required several major certifi cations for its products in per hour using the CTX 9800 for even the most demanding operating the United Sates and Europe, in particular for computed tomography the CTX 9800 and CTX 5800 computed system tomography systems. It also booked orders from around the world for the Itemiser DX portable explosive trace detector.
X4, tomorrow’s helicopter The X4 helicopter, which will succeed the Dauphin, is a fl agship program in Eurocopter’s range of civil rotorcraft. It will be developed using funding from the French economic stimulus program, Planned acquisition of L-1 Identity Solutions and is slated to enter service in 2016. The technological aspects of this new helicopter, dubbed The planned acquisition of L-1 will signifi cantly bolster Safran’s world leadership in security “Petrah”, mark a major step towards the “more electric” helicopter. Safran has signed an solutions due to several key factors: complementary technological fi t with facial and iris agreement with Eurocopter and Thales to develop the avionics suite for this new helicopter, recognition; and complementary footprints, especially with the addition of the secure driver’s bolstering the Group’s position in fl y-by-wire controls for rotary-wing aircraft. license market in the United States.
44 45 HUMAN RESOURCES 2010 ANNUAL REPORT SAFRAN HUMAN RESOURCES
A STRONG, HUMAN RESOURCES: for executives between companies and jobs. Safran Corporate University SAFRAN’S MAIN CAPITAL This goal requires shared operating modes, The training courses run by the new Safran To keep pace with its growth, Safran faces two developing networking, and the exchange of Corporate University are grouped into three INTEGRATED GROUP challenges: skills management and best practices and cooperation through closer main categories: internationalizing its customers and teams. The working relationships. This makes Safran • Leadership and Management: facilitating level of skills and ability to develop its employees’ Corporate University, reorganized in 2010, an shared management practices based on the The Safran group is developing in today’s global economy. Besides growing know-how are particularly crucial factors for high- ideal resource for all employees in the Group, Group’s values. in scope and reorganizing, it is also assuming its corporate social responsibility tech business activities. Safran focuses two from high-level managers to staff affected by • Professions and Skills: enhancing thirds of its recruitment efforts on attracting career changes, whatever their company and technological and production skills, as well as as a leading economic player by signing agreements and implementing a engineers. In 2010, Safran created three new location. The University is a great way to spread skills required for support posts in accounting, dynamic human resources policy. departments within the HR division: the Social the Safran group’s culture, identity and values. purchasing, human resources, etc. Relations department, the Management and • Employment-Training: protecting the Senior Executives department and the Training employability of each and every employee in and Managerial Development department. The the Group, by facilitating retraining for those latter two share a goal: strengthening the Group’s whose skills need to be adapted or whose jobs common culture and enabling greater mobility have changed.
46 47 ALMOST 25% OF SAFRAN EMPLOYEES AROUND THE WORLD ARE WOMEN (HERE, IN MEXICO)
1,360 2,100 4 % 70 % staff hired interns of payroll of employees take a training in France welcomed expenditures course at least once a year in 2010 in France in dedicated to 2010 training
CORPORATE SOCIAL RESPONSIBILITY MODERNIZATION OF SUPPORT POSTS A GROUP AGREEMENT ON AND DIVERSITY The purpose of modernizing support posts is EMPLOYING SENIORS Responsible corporate citizenship, the power of to provide the Group with more effi cient ways An agreement in favor of employing sen- teamwork and bringing out the best in men and of operating, to substantially develop a service iors was signed in France on February 12 women – three of Safran’s core values – are culture, to help build an integrated group and for a period of three years. In addition to illustrated in several ambitious projects aimed at to share common processes. As an example, the goal of keeping seniors in employ-
fostering diversity. the creation of Safran Purchasing in November ment, the agreement is also intended SIGNING THE DIVERSITY CHARTER, One of their main focuses will be on better fulfi lls all these purposes, bringing together buy- to improve the transfer of knowledge NOVEMBER 8 HUMAN RESOURCES integrating disabled persons. With a project ers dedicated to non-production purchases. and skills. It includes a provision for main- called “Élan” launched in 2006 by the Safran Another shared services center now manages taining a level of least 14% of the Group’s Foundation for Integration, the Group takes on the administration and payroll of French employees in the over-55 age bracket. students for work-study courses. In this same employees. In 2010, 50% of French workers were area, Safran supports the SALTO project and the Reorganization projects have also been set up over 45. HAN’VOL association. On May 21, Safran also within the Computer Systems and Information
2010 ANNUAL REPORT signed an agreement with Agefi ph (1), setting an Technology department, and in the Legal, objective of hiring or training 146 disabled Communications and Health, Safety and
SAFRAN persons over a period of two years, including 49 Environment (HSE) departments. The projects permanent or fi xed term contracts, 67 apprentices are aimed at smoothing processes and com- and 30 interns. munication between the Group’s key central Steps have also been taken to foster gender posts and their network of correspondents in equality. The Group is a partner in the “Elles various companies and countries.
bougent” association, which aims to promote (1) Agefiph: organization that manages funds allocated to women’s roles in science education and employment of the disabled in France. encourages overall diversity when hiring staff, particularly with regard to engineers and executives. Moreover, as in 2008 and 2009, Safran continued to welcome 250 young people per year from disadvantaged urban areas under the French government’s “Espoir Banlieues” program. Signing the diversity charter On November 8, in an additional step forward in Safran’s commitment to equal opportunity and diversity, Jean-Paul Herteman, Chief Executive Offi cer, signed the diversity charter. Also in attendance at the signing in Évry, France, were Manuel Valls, Mayor of Évry and member of the French Parliament, Pierre Lambert, Prefect with delegated responsibility for equal opportunity in the Essonne region, and Claude Bébéar, Honorary Chairman of the AXA group THE COMPANY’S SKILLED SENIORS and co-initiator of the diversity charter.
48 49 HEALTH BOAT SAFETY SPONSORSHIP ENVIRONMENT 56 52 RESPONSIBILITY 2010 ANNUAL REPORT PATRONAGE
SAFRAN 54 Safran’s corporate responsibility takes the form of various commitments such as the fi ght against climate change, protection of the environment and people’s health, cultural and social patronage and a boat sponsorship initiative. The Group develops these corporate social responsibility actions in line with the core values that underpin its identity.
50 51 HEALTH, SAFETY, ENVIRONMENT
8,500 M 3 42 % of rinsing baths recycled each year reduction in water consumption thanks to at the Turbomeca site in Mézières- modifi cations made to the plumbing at Responsible corporate citizenship is one of the values of the Group, which is committed sur-Seine (France) Labinal in Chihuahua (Mexico) to effi ciently managing its health, safety and environment risks.
SPECIFIC TARGETS AND A NEW A GLOBAL MANAGEMENT SYSTEM PREVENTION CULTURE WATER AND ENERGY ORGANIZATION The Group’s HSE management system is based Managers have various tools and methodologies SAVINGS IN POLAND The Sustainable Development department was in particular on 26 standards that apply available for improving their HSE risk The Hispano-Suiza site (Safran) in extended in 2010 to become the Health, worldwide, allowing each unit to measure its management. The TEHSE program (traceability Poland set up a new wastewater Prevention, Safety, Environment and maturity level with regard to risk management. and evaluation of exposure in health, safety treatment plant in 2010. This Sustainable Development department (HPSE These standards were reworked in 2010 and are and the environment) gathers data on all innovative “zero discharge” closed & SDD) Safran’s intention is to set up a both a real roadmap for managers and an work-related risks. The program was already cycle facility is equipped with a prevention culture throughout the entire Group. effi cient tool for performance monitoring. They up and running at around fi fty sites in 2010, low temperature energy-saving HEALTH, SAFETY, ENVIRONMENT The fi rst target is to improve working conditions evolve over time, in line with the requirements of and it will be deployed throughout the entire system. Water consumption can with regard to health and safety, in particular the Group’s customers. This is also true for the Group in 2012. Managers can use the Group be reduced by 1,500 m 3 in one by cutting the number of work-related Safran HSE audit guidelines, which will be approach for the prevention of psychosocial year, energy consumption by accidents and illnesses in half within fi ve years. replacing the guidelines currently used (ISO and risks, including a method for assessing the risk 24 MWh and 69 tons of industrial The aim with regard to the environment is to OHSAS). Test audits were conducted in selected of stress, already deployed in 2010 at 14 sites waste are eliminated. reduce environmental impacts (water and air companies in 2010 – at Techspace Aero in Liège with a total of 14,000 employees.
2010 ANNUAL REPORT emissions, waste production, water and energy (Belgium), Sagem Industries in Fougères (France), consumption) and to prevent and manage Sagem in Valence (France) and Turbomeca in
SAFRAN technological and natural risks (pollution, fi re, Dallas (United States). fl ooding). The core team in the HPSE & SDD is structured into three geographical areas; each area coordinator manages a network of preventers REDUCED NUMBER ENHANCED TREATMENT OF OF ACCIDENTS spanning various sites that are geographically INDUSTRIAL WASTEWATER close, belonging to different companies in the Group. In HSE, as in other posts at Safran, integration of processes has continued, together with interdisciplinary work and the emergence of a Group culture. Measuring our carbon footprint In 2008, Safran invested in a tool to measure its carbon footprint, setting a goal of reducing
its CO 2 emissions by 15% by 2012. At the beginning of 2010, 65 sites were being measured, accounting for 90% of the Group’s revenues and 85% of its staff. Three new sites have since joined the scope of the project. At the forefront of companies in the aerospace sector, Safran also started a procedure at the end of 2009 to obtain the Carbon Progress ® label, delivered by Bureau Veritas Certifi cation, to highlight steps toward sustainably reducing its carbon footprint. The pilot site, the Group’s head offi ce in Paris, passed the fi rst milestone in the MEASURING THE CARBON procedure in 2010. FOOTPRINT
52 53 PATRONAGE
612 68 pupils attended the concert organized by Safran employees the Safran group, in partnership with the French are voluntary mentors Safran is a demanding corporate philanthropist; its commitment to long-term investment in Ministry of National Education and the in the Élan program Orchestre de l’Alliance industry is equally strong and dedicated in the social and cultural spheres.
The proactive approach adopted by the Safran participating in projects conducted in ... AND A PATRONAGE POLICY LINKED MI-SA YANG, WINNER OF THE SAFRAN group for issues relating to solidarity was collaboration with the Group HR division and TO LONG-TERM PARTNERSHIPS FOUNDATION PRIZE reaffi rmed in late 2009/early 2010 with the each company’s HR division. In addition to the The initiatives supported by the Group through FOR MUSIC reneval of its two corporate foundations for Élan program, which accepts around thirty its patronage policy combine a social and integration and music for a period of fi ve years. young disabled people each year for work- cultural approach in cooperation with partners Safran’s corporate patronage policy is part of study courses leading to a qualification, a that have a leading role to play. Safran has a larger global approach, and is developed second joint undertaking has been launched thus entered into a very strong long-term within these two foundations, through steps to support the Frateli association. Its objective partnership with the French Ministry of PATRONAGE to promote solidarity undertaken with major is to pair up high-potential students from lower National Education. For the third year running, partners. Over 200 projects have been income families with “mentors” – young high- pupils from schools in educational priority supported in France and abroad since 2005. level employees. areas in the three Île-de-France school districts were invited by Safran to attend a TWO CORPORATE FOUNDATIONS concert given by the Orchestre de l’Alliance WHOSE DIVERSE ACTIONS EMBODY in the Salle Gaveau hall in Paris on December
2010 ANNUAL REPORT THE VALUES OF A SOCIALLY 14, with the Minister of Education, Luc Chatel, RESPONSIBLE GROUP... also present.
SAFRAN The Safran Foundation for Integration fosters the social and professional integration of young adults with motor, sensory, mental or social disabilities. “It is because of this goal, so easy FRENCH EDUCATION to say, but with very ambitious objectives, that MINISTER LUC CHATEL, DURING THE CONCERT I have accepted the position of director,” said GIVEN BY THE ORCHESTRE Dr. Xavier Emmanuelli, founder of the “Samu DE L’ALLIANCE IN THE SALLE GAVEAU social” social assistance service. Around fi fteen projects from very high-quality associations SUPPORT FOR THE MOROCCAN were thus selected by the board of directors ASSOCIATION INSAF, TO ENABLE in 2010. The Foundation makes every effort to Two excellent examples of Safran’s involvement 150 GIRLS TO RETURN TO SCHOOL support projects that combine the Group’s in favor of diversity and equal opportunity AND PROVIDE EMPLOYMENT FOR 100 SINGLE MOTHERS industrial universe with the public interest. An The Safran Foundation for Music supports talented young musicians in their training or the example of this is the approach adopted by development of their professional careers by supporting the places where they perform. The the association “Les Ailes de la ville,” which young violinist Fanny Clamagirand underscores this aid: “With the support of the Foundation, provides aerospace industry skills training at I have made signifi cant progress in my career and I have been able to raise my artistic level the Air and Space Museum at Le Bourget,for even farther.” The Safran Foundation annual prize for music, awarded this year to Mi-Sa Yang, young people having diffi culty fi nding a job. a brilliant young South Korean violinist, illustrates the close link that exists between the Group Moreover, Safran employees now have the and the world of classical music, through the shared values of excellence and technical FRATELI: SPONSORS AND SPONSORSHIP RECIPIENTS opportunity to take part in the Foundation by sophistication.
54 55 BOAT
INAUGURATED IN JUNE 2010 SPONSORSHIP BY THE PRESIDENT OF FRANCE,TURBOMECA’S NEW JOSEPH SZYDLOWSKI PLANT IS A 100 MILLION EURO INVESTMENT.
Safran’s corporate culture is distinguished by mastery of cutting-edge technologies, honoring commitments and the ability to maintain long-term partnerships. These three components are also manifested in the way that the Group’s boat sponsorship program is run.
TECHNOLOGY, RESPECT FOR OTHERS long-term development plan for continuous WE’VE GOT AND LONG-TERM PARTNERSHIPS improvement of the platform is intended to A WINNER! The ability to develop strong, long-lasting ensure that Safran remains the benchmark boat On July 1, 2010, the Round Spain race partnerships is a remarkable characteristic of in the IMOCA class. Work done in 2010 focused ended in Barcelona with a resounding the Safran group. This trademark has been on reducing the weight of the boat and lowering victory for Safran and its crew, led by Marc omnipresent in the boat racing sponsorship its center of gravity, developing a simpler, more Guillemot, after winning four of the six project right from the start. Establishing long- reliable, higher-performance hydro-generator, stages of the race. In November, Safran term relationships with the skipper, Marc and developing a groundbreaking fuel cell. and its skipper came in third against Guillemot, the architects, service providers and particularly stiff competition in the La BOAT SPONSORSHIP the shipyard where the Safran boat was built Route du Rhum - La Banque Postale has been a key factor for success and race. The Group also co-sponsors a crew performance. The project has been sustained of young Bretons who fi nished fi rst in the by the enthusiasm of the men and women “Student” category in the annual Tour de in the Group who contributed Safran’s France à la Voile race and came in eighth technologies, procedures and methods, overall.
2010 ANNUAL REPORT constituting a unique breakthrough in the history of boat racing sponsorship. SAFRAN COMPETITION AS A STIMULUS Safran has a profound belief in the virtues of emulation and competition as a stimulus to outdo oneself and push boundaries, both in industry and in ocean racing. It does not claim any exclusivity in this respect; the shape of the Safran hull has been used to build new boats, thus creating formidable competitors. At Safran, thinking ahead to stay ahead is in Graphic design and production: - Document printed on Condat silk PEFC 300 g and 150 g paper. our DNA. We never allow ourselves to rest on Photo credits: Front cover Éric Drouin/Snecma – Thierry Mamberti/Safran – Morpho/Thomas Goldet/Studio RG – Studio Pons/Safran – Thierry the laurels of our current performance; Mamberti/Safran – Studio Pons/Aircelle – p. 2 Alphabet Euro RSCG C&O – p. 2, 4, 5, 35, 39, 43 Roberto Frankenberg – p. 6 Eric Drouin/Snecma, instead, we deploy a continuous improvement Frédéric Lert/Safran – p. 7 Jean-François Damois/Creative Center/Safran – Morpho – p.12 Zhou JunXiang/Imaginechina/Safran approach in our boat racing sponsorship. The – p. 15 Fotolia – p. 17 Airbus – Étienne Follet – ESA-CNES-AE CSG Service Optique J-M Guillon – p. 21 Daniel Linares/Sagem – Andy Wilson/ Moodboard/GraphicObsession – Éric Drouin/Snecma – p. 25 Sebastian Piramovicz – Snecma – Amit Dey/Morpho – p. 31 Gérard Vouillon/Morpho – GlowImages/GraphicObsession – Éric Drouin/Snecma – p. 37 Jérôme Sigalas/Safran – Snecma – Frédéric Lert/Safran – p. 41 Image provided courtesy of Bombardier Inc. – Patrick Boulen/Aircelle – Vince Streano/Creative Center/Safran – p. 44 Courtesy of Eurocopter – p. 45 Arjun Mehta/ Safran – p. 49 Arturo Rodriguez/Safran – Éric Forterre/Safran – François Laforêt/Equivox – p. 53 Thierry Mamberti/Safran – Wojciech Pietraszek/ MARC GUILLEMOT PP-EKO Ltd. – Rémy Guillaumot/Safran – p. 55 DR – Jean-François Damois/Creative Center/Safran – Insaf – Éric Drouin/Safran – p. 56 François ON SAFRAN Van Malleghem/DPPI/Safran – Inside back cover Créav Atlantique.
56 SAFRAN 2, boulevard du Général-Martial-Valin – 75724 Paris Cedex 15 – France Phone: +33 (0)1 40 60 80 80 www.safran-group.com