Results for the 2009/2010 Fiscal Year - Zodiac Aerospace Emerges Strengthened from the Economic Crisis

• Results for the 2009/2010 fiscal year exceed initial guidance:
  • Limited decrease in organic revenues (-1.0%), above initial guidance of a mid-single digit decrease
  • 11.2% COI margin,vs. 8.0% initial target
  • 5.2% increase in Restated Net Earnings, to €148.9m
• Zodiac Aerospace (Paris:ZC) resumed its successful external growth strategy: Cantwell Cullen, Quinson and Sell will strengthen the Group’s positions in protected wire harnesses, electrical assemblies and cabin interiors
• Significant deleveraging (net debt of €514.4m as of August 2010), driven by strong cash flow generation and a strict monitoring of working capital

The Zodiac Aerospace Supervisory Board approved the 2009/2010 consolidated financial statements at its meeting of November 18, 2010

FY 2009/2010 RESULTS EXCEED INITIAL GUIDANCE

^* Excluding Marine impact and acquisition costs (IFRS 3)

Sound operational performance

Fiscal year 2009/2010 marked the beginning of the recovery. The end of the year showed improved activity in each of the Group’s segments. Zodiac Aerospace’s revenues registered a slight decrease (-2.5%) at €2,150.3m. Excluding the impact of perimeter and exchange rate changes, revenues decreased by -1.0%, vs. an initially expected mid-single digit decrease.

The Group registered a COI margin of 11.2% vs. 11.3% in 2008/2009, despite a 7cts deterioration of the transaction euro/dollar parity (1.37 vs. 1.30). Based on a comparable exchange rate of 1.50, the COI margin would be 9.7%, significantly above the Group’s initial target of 8.0%. This strong performance is explained by sustained cost control efforts in FY 2009/2010, and the volumes recovery in H2.

Confirmed recovery in all segments

• AeroSafety & Technology

The AeroSafety & Technology segment posted two consecutive quarters of growth in Q3 and Q4 2010 (excluding Airbags business). The segment strengthened its positions in protected wire harnesses with the acquisition of Cantwell Cullen & Company, the Canadian leader in the field. The AeroSafety and Technology segment has also taken the required steps to conform all its activities to the Oslo convention. The only affected contract will be terminated as of end 2010.

• Aircraft Systems

The Aircraft Systems segment registered three quarters of decline from Q1 to Q3 2010, mainly due to the destocking in the business jets business. Unfavorable exchange rates also impacted the segment’s Current Operating Income. However,the Aircraft Systems segment resumed revenues growth in Q4 2010. Despite this significantly unfavorable environment, the Group’s efforts to lower breakeven level,initiated in the past fiscal year, have limited the decline of the segments’ margin.

• Cabin Interiors

After a challenging H1, the Cabin Interiors segment recorded double-digit growth in H2 2010 (+11%). This strong performance is mainly driven by sustained activity in the seating market for Commercial aircrafts and a good performance in Cabin Systems, which compensated the decreasing deliveries to Regional aircrafts by new cabin refurbishment contracts. The Cabin Interiors segment acquired Sell GmbH on September 30, 2010.

All three segments registered new commercial successes in FY 2009/2010. The Group strengthened its market shares in cabin interiors and was selected as supplieron new platforms such as Bombardier’s CSeries aircrafts, or Irkut’s MC-21. Zodiac Aerospace will also be a significant supplier to China’s future commercial aircraft, the Comac 919.

Earnings per share

The Group reported earnings per share of €2.80, and of €2.81 restated from the impact of acquisition costs and the sale of Marine activities, a 4.9% increase on FY 2008/2009 restated earning per share. This growth is driven by a new decrease in financial expenses, from €34m to €26m, and the reduction of non-current operating charges from €21.5m (of which €5.1m related to the sale of Marine activities) to €9.1m.

Decreasing net debt

Zodiac Aerospace has registered a new sharp decrease in net debt. Net debt declined to €514.4m (vs. €654.5m in 2008/2009), corresponding to a gearing of 34% vs. 52% in 2008/2009. This strong decrease, which takes into account the acquisitions of Quinson and Cantwell Cullen & Co., is mainly driven by the Group’s continued efforts to improve working capital. The net debt / EBITDA ratio is 1.7x.

Zodiac Aerospace is pursuing its external growth strategy

In 2009/2010, Zodiac Aerospace has resumed external growth, a key element of the Group’s development strategy. The acquisitions of Quinson and Cantwell Cullen & Co have been finalized in fiscal 2009/2010. Quinson is consolidated in the Aircraft Systems segment since June 2010, while Cantwell Cullen & Co is consolidated in the Group’s accounts since August 2010.

Initiated in 2009/2010, the acquisition of Sell, one of the world’s leaders in galleys and electrical equipment for galleys, was finalized on September 30, 2010. Sell will be consolidated for 11 months in the Group’s 2010/2011 accounts.

Dividend

The supervisory board will propose the distribution of a €1 dividend per share at the general meeting of shareholders on January 10, 2011

Sound growth perspectives

Favorable outlook for 2010/2011

Favorable market trends are confirming the uptake of the aeronautic cycle.

Zodiac Aerospace demonstrated in the past quarters its ability to resist economic slowdown by maintaining solid organic growth and double-digit margins, while decreasing its leverage.

Olivier Zarrouati, Chairman of the Executive Board of Zodiac Aerospace, declared: "Thanks to the strengthening of its positions, through organic growth or recent acquisitions, and with a flexible financial structure, The Group is ideally positioned to benefit from the impending recovery of current aircraft programs and the ramp-up of new programs. Zodiac Aerospace intends to pursue its successful strategy combining organic and external growth, while maintaining its constant focus on improving profitability”

The exchange rate environment remains volatile. The Group is pursuing its initiatives to reduce its exposure to changes in the euro/dollar parity. In the short term, Zodiac Aerospace has hedged c. 75% of its transaction exposure (including Sell) at an average 1.28 rate over fiscal 2010/2011.

Zodiac Aerospace is targeting revenues growth in the region of 15% in 2010/2011, excluding new acquisitions. Based on a 1.30 euro/ dollar parity, and a COI margin sensitivity of 1.2pp per 10cts change in exchange rate, the Group is targeting a COI margin ranging from 12% to 13% in 2010/2011. Excluding new acquisitions, the net debt / EBITDA ratio is expected to be comparable to the FY 2009/2010 level, illustrating the Group’s ability to pursue further acquisitions.

Mid term growth and COI margin outlook

In the medium-term, Zodiac Aerospace is targeting top-line organic growth of more than 40% over the next three years and a 2.5 to 3ppimprovement of its COI margin over the same period (based on a €/$ exchange rate of 1.30). Moreover, selected add-on acquisitions should yield significant additional profitable growth.