| Safran: Reports Its Third Quarter 2024 Revenue - Full-Year Outlook Profit Raised |
| Adjusted data |
- Q3 2024 revenue: €6,639 million (+14.0%)
|
- 9m 2024 revenue: €19,686 million (+17.4%)
|
| Consolidated data |
- Q3 2024 revenue: €6,682 million
|
- 9m 2024 revenue: €19,886 million
|
| FY 2024 outlook updated |
- Revenue around €27.1 billion (vs. around €27.4 billion previously)
|
- Recurring operating income around €4.1 billion (vs. close to €4.0 billion previously)
|
- Free cash flow around €3.0 billion
|
| Foreword |
- All figures in this press release represent adjusted data, except where noted. Please refer to the definitions and reconciliation between Q3 and 9 months of 2024 consolidated revenue and adjusted revenue. Please refer to the definitions contained in the footnotes and the Notes on page 7 of this press statement.
|
- Organic variations exclude changes in scope and currency impacts for the period.
|
| CEO Olivier Andriès said: "In light of the strong performance in the first 9 months of the year, with a 17% growth in revenue driven notably by aftermarket activities for engines and aircraft equipment, Safran is raising its full-year profit forecast. Narrowbody OE deliveries were limited by supply chain bottlenecks in specific areas. The Group's priority remains to best meet customer needs and unlock supply chain constraints. We remain very confident in our ability to continue on a path of profitable growth in the years to come, which we will present at our upcoming CMD." |
| Q3 and 9m 2024 revenue |
| Q3 2024 |
| Q3 2024 revenue stood at €6,639 million, up by 14.0% compared to Q3 2023 (+13.8% on an organic basis) driven by civil aftermarket and robust growth from Equipment & Defense and Aircraft Interiors. The change in scope was €57 million within Equipment & Defense. Currency impact was €(45) million, with an average €/$ spot rate of 1.10 in Q3 2024 (1.09 in Q3 2023). €/$ hedge rate in Q3 2024 stood at 1.12 (1.13 in Q3 2023). |
| 1 Acquisition of Thales Aeronautical Electrical Systems activities in October 2023 and Air Liquide Aeronautical oxygen and nitrogen activities in February 2024. |
| As for organic revenue per division: |
- Propulsion was up by 9.2% driven by services growth.
Civil aftermarket (in $) grew by 20.5% compared to Q3 2023, reflecting another strong increase in LEAP rate per flight hour (RPFH) contracts and to a lesser extent CFM56 and high-thrust engine spare parts sales.
|
|
LEAP engine deliveries were up sequentially with 365 units in Q3 2024 (297 units in Q2 2024) but were down 6% compared to Q3 2023 (389 units) as supply chain performance still requires enhancement.
Military engine revenues rose year-over-year, driven by a higher level of services and Original Equipment (OE) benefiting from a favourable mix and higher M88 deliveries.
Helicopter engine revenue growth was driven by OE with increased turbine deliveries (notably Arriel). |
- Equipment & Defense was up by 16.3% driven by all businesses, notably defense, nacelles and landing systems.
|
|
OE sales registered a 19.0% increase, driven by higher volumes in nacelles (A320neo, G700), electrical systems (787, A320neo) and avionics (Actuation Systems). In defence activities, substantial growth was fueled primarily by guidance systems. The growth momentum observed in the first half slightly slowed in Q3, in particular, due to decreased demand from one airframer for equipment required at the start of the assembly line. |
|
Aftermarket services were up by 12.6%, with growth across all activities, notably in landing systems (carbon brakes) and to a lesser extent in electrical systems. |
- Aircraft Interiors continued its sales expansion with a solid 28.4% increase although it remains 4% below 2019 levels.
|
| OE sales growth (+30.2%) is mainly attributed to Seats with a significant increase in business class seat deliveries (592 units in Q3 2024 vs. 174 in Q3 2023 and 508 in Q2 2024). Additionally, Safran Passenger Innovations (IFE) contributed to an increase in entertainment system deliveries to airlines. |
|
Aftermarket activities (+25.4%) were robust in both Cabin (primarily spare parts) and Seats (notably with Asian and Middle Eastern airlines), driven by the recovery of the widebody market. |
| 9m 2024 |
| Revenue for the first nine months of 2024 amounted to €19,686 million, up 17.4% compared to 9m 2023. Sales increased by €2,850 million (+17.0%) on an organic basis mainly thanks to Equipment & Defense and Propulsion (o/w civil aftermarket, +26.2% in $). The change in scope was €105 million2. A currency impact of €(3 million reflects a negative translation impact of USD revenues, with an average €/$ spot rate of 1.09 in 9m 2024 (1.08 in 9m 2023). €/$ hedge rate in 9m 2024 was at 1.12 (1.13 in 9m 2023). |
| 2 Divestment of Cargo & Catering in May 2023. Acquisition of Thales Aeronautical Electrical Systems activities in October 2023 and Air Liquide Aeronautical oxygen and nitrogen activities in February 2024. |
| Currency hedges |
| The hedge book amounts to $54.0 billion in September 2024, compared to $54.4 billion in June 2024. |
- 2024 is hedged: The targeted hedge rate is $1.12, for an estimated net exposure of $12.0 billion.
|
- 2025 to 2027 are hedged: targeted hedge rate between $1.12 and $1.14, for an estimated net annual exposure of $13.0 billion.
|
- 2028 is almost fully hedged: $11.9 billion hedged out of an estimated net exposure of $13.0 billion.
|
| Share buybacks |
| In July 2023, Safran announced a €1 billion share buyback for cancellation to be carried out in 2024 and 2025. A first tranche of €250 million was completed in August 2024 (1.3 million shares repurchased). On September 20, 2024, Safran launched a second tranche for a maximum amount of €500 million to be carried out no later than December 11, 2024. |
| All shares repurchased during these two tranches will be cancelled by the end of 2024. |
| The remaining €250 million will be repurchased in H1 2025. |
| Portfolio management |
| Safran acquired Preligens, a leader in artificial intelligence (AI) for aerospace and defence for an enterprise value of €220 million. The company was renamed Safran.AI and is integrated within Safran Electronics & Defense. |
| On September 10, 2024, Safran announced the contemplated acquisition of the US company CRT (Component Repair Technologies), a world leader in the repair of aircraft engine parts, based in Ohio, USA. This acquisition reflects Safran’s plan to strengthen its maintenance, repair and overhaul (MRO) capabilities in the Americas. The closing of the transaction is expected by the end of 2024. |
| Full-year 2024 outlook updated |
| Despite revised downward expectations for OE deliveries on narrowbody aircraft, the strong performance in the first 9 months of the year enables Safran to update its full-year 2024 outlook (adjusted data): |
- Revenue around €27.1 billion (versus around €27.4 billion previously);
|
- Recurring operating income around €4.1 billion (versus close to €4.0 billion previously);
|
- Free cash flow is around €3.0 billion, subject to the schedule of some advance payments.
|
| This outlook is based notably, but not exclusively, on the following assumptions: |
- LEAP engine deliveries: around -10% compared to 2023 (vs. flat to 5% previously);
|
- Civil aftermarket revenue (in USD): up mid-twenties;
|
|
|
|
|
| The main risk factor is the supply chain production capabilities. |
| Potential impact of new tax measures in France |
| The French government has confirmed its intention to implement a temporary increase in the corporate income tax rate. A 41.2% surtax could apply in 2024, resulting in an overall rate of 36.13% (instead of the current 25.83%), and a 20.6% surtax could apply in 2025, resulting in an overall rate of 30.98%. If such a measure were to be implemented, Safran estimates that the additional current tax expense for 2024 would be in the range of €320-340 million, with the related cash outflow in 2025. |
| Other measures have been introduced in the draft Finance Bill, which could have a marginal impact on Safran: |
- the introduction of a new registration fee applicable to the cancellation of shares repurchased by the company,
|
- the postponement of the abolition of the tax known as “CVAE” (Contribution on the Added Value of Enterprises).
|
| For the full document click the link below: |
| Safran |
| Stay ahead of the curve! Subscribe to InsidEntity for daily updates on all your favourite companies. |
