Safran raises full year 2018 outlook significantly

Safran has reported that for the first half of 2018 (H1 2018) adjusted revenue was Euro 9,506 million, an increase of 23.9% on a reported basis, including a four-month contribution of Euro 1,516 million from Zodiac Aerospace and Euro (445) million of currency impacts. On an organic basis, adjusted revenue grew 10.1%.

Adjusted recurring operating income was Euro 1,386 million (14.6% of revenue), an increase of 32.6% on a reported basis compared to Euro 1,045 million (13.6% of sales) in the first half of 2017 (H1 2017). H1 2018 recurring operating income included a four-month contribution from Zodiac Aerospace amounting to Euro 129 million. Excluding Zodiac Aerospace, adjusted recurring operating income grew 20.3%.

Adjusted net income – Group share was Euro 932 million (basic adjusted EPS of Euro 2.17 and diluted adjusted EPS of Euro 2.11). In H1 2017, adjusted net income – Group share amounted to Euro 1,488 million comprising Euro 716 million of net income from continuing operations and Euro 772 million of net income from discontinued operations.

Free cash flow generation amounted to Euro 820 million (including Euro 25 million from Zodiac Aerospace), representing an increase of 23% compared with Euro 666 million in the year-ago period. The growth was driven by higher cash from operating activities and lower capital expenditures, partially offset by an increase in working capital. At constant scope, H1 2018 free cash flow amounted to 63% of adjusted recurring operating income.

Net debt position was Euro 3,533 million as of June 30, 2018, including the acquisition of Zodiac Aerospace.

Safran (excluding Zodiac Aerospace) raises its outlook for 2018 as the strong momentum for Propulsion, Aircraft Equipment and Defense seen in H1 2018 should continue into H2 2018.
As a result, compared to 2017 figures restated for IFRS 15, Safran expects:
Adjusted revenue to grow on an organic basis in the range 7% to 9%. At an estimated average spot rate of USD 1.21 to the Euro in 2018, adjusted revenue is expected to grow in the mid-single digits.
Adjusted recurring operating income to grow around 20% at a hedged rate of USD 1.18 to the Euro. Free cash flow to be comfortably above 50% of adjusted recurring operating income, an element of uncertainty being the rhythm of payments by state-clients.