Safran reports excellent performance driven by civil engines aftermarket

Safran’s CEO, Olivier Andriès, has expressed enthusiasm regarding the company’s performance in the first half of 2023. He said that numerous new orders have been announced since the beginning of the year, and there’s a notable increase in narrow-body air traffic, surpassing the levels seen in 2019. As a result, there is a significant demand for spare parts and aftermarket services, indicating a positive trend in the aviation industry. Despite facing challenges in the industry-wide supply chain, Safran remains dedicated to meeting its delivery commitments and is actively focused on ramping up production. The company’s strong performance in the first half of the year has prompted them to revise its profit and cash guidance for the year, indicating optimistic prospects.

The global narrow-body capacity increased throughout the first part of the year. In H1 2023, narrow-body ASK were at 102% (on average) of 2019, with Q2 2023 at 104% of Q2 2019.

H1 2023 revenue amounted to €10,945 million, up 27.9% compared to H1 2022, 25.9% organic. Change in scope was €28 million. Currency impact of €136 million reflected a positive translation impact of USD revenues, with an average €/$ spot rate of 1.08 in H1 2023 (1.09 in H1 2022). €/$ hedge rate was at 1.13 (1.15 in H1 2022). Q2 2023 sales increased by 26.5% at €5,679 million (27.1% organic) compared to Q2 2022.

On an organic basis, H1 2023 revenue increased by 25.9%: 

Propulsion increased by 34.1% supported by a solid civil aftermarket activity (+36.5% in USD) driven by strong spare parts sales for CFM56 as well as service activities. LEAP deliveries reached 785 units (465 in H1 2022), representing a 69% annual growth. Military engine activities benefitted from higher M88 deliveries in France. Helicopter turbines registered a slight growth with both OE and services activities impacted by supply chain issues;  

Equipment & Defence was up 14.4% mainly driven by aftermarket services across all activities, especially in Nacelles. OE sales were slightly up, impacted by industry-wide supply chain difficulties (landing gears, avionics) and by revised demand; 

Aircraft Interiors revenue recorded a 33.8% growth primarily driven by services for all activities. OE Cabin and Passenger Innovation (IFE) activities performed well during the first part of the year. OE Seats revenue was flattish with a fall in volumes on business class seats.

Adjusted net income – Group share was €1,043 million (+95%) in H1 2023 (basic EPS of €2.48 and diluted EPS of €2.40) compared with €536 million in H1 2022 (basic EPS of €1.26 and diluted EPS of €1.22). 

Safran reported net financial income of €63 million, including reduction of cost of debt at €42 million (returns on cash investments exceed cost of debt) and €21 million exchange revaluation of positions in the balance sheet as well as a tax expense of €(318) million (22.7% apparent tax rate). (£1.00 = €1.17 at time of publication).