Safran Books Higher Quarterly Revenue, Raises 2021 Free Cash Flow Target -- Update
October 29 2021 - 3:28AM
Dow Jones News
By Olivia Bugault
Safran SA raised its cash flow outlook for the year while
maintaining its sales and profitability targets after booking
higher revenue in its third quarter.
At 0747GMT, Safran trades 3.8% higher at EUR118.40.
The French aerospace company said Friday that it now expects to
generate more than 1.5 billion euros ($1.74 billion) in free cash
flow this year, compared with a previous guidance of above 2020
levels. Last year, Safran generated EUR1.07 billion in free cash
flow. The company said it upgraded its target thanks in part to new
advance payments on Rafale export contracts.
The company backed its other targets with its adjusted revenue
expected to fall organically in the low single digits, while its
2021 adjusted recurring operating margin should increase by more
than 100 basis points compared with its 10.2% margin in 2020.
Its outlook is based on assumptions that it will deliver around
900 LEAP aircraft engines this year, up from above 800 previously,
it said.
"Safran's third-quarter revenue confirms that the recovery is
gaining strength month after month, which makes us optimistic for
the future," Chief Executive Olivier Andries said.
In its third quarter, adjusted revenue--which it says better
reflects its performance and allows comparisons--was EUR3.73
billion, up 10.4% thanks to recovery in its services activities.
Its consolidated revenue stood at EUR3.72 billion.
Its aerospace propulsion division performed the best with 16%
growth in revenue for the period as civil aftermarket rebounded
strongly. Revenue from civil aftermarket--which includes spare
parts and maintenance, repair and overhaul activities for civil
aircraft engines--rose 44% year-on-year and should continue to
improve in the last three months, it said.
Civil aftermarket activities are a key profitability driver for
Safran and therefore, the better-than-expected growth in the third
quarter bodes well for full-year profits, Citi said.
On Wednesday, European plane maker Airbus SE confirmed its plan
to ramp up production of its A320 jet family, saying it was
targeting a monthly production rate of 65 by the summer of 2023,
while it was still studying a potential increase to up to 75 a
month by 2025. Safran--which produces engines that power the
majority of A320s via its joint venture with General Electric CFM
International--is committed to supplying enough engines for the 65
monthly production rate but see challenges if Airbus goes above,
its Chief Executive Olivier Andries said during a call with
journalists.
Olivier Andries also commented on the supply-chain situation,
saying that there is tension regarding the availability of raw
material.
Write to Olivia Bugault at olivia.bugault@wsj.com
(END) Dow Jones Newswires
October 29, 2021 04:13 ET (08:13 GMT)
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