Aircraft propulsion and equipment maker Safran reported solid 2018 results on February 27, both financially as well as on the status of its various programs and divisions. Revenues of its six business divisions increased by €5.097bln to €21.050bln, of which €3.799bln coming from a ten-month contribution since the integration of Zodiac Aerospace.
France-based Safran – with various production sites worldwide – reported a net Group income of €1.981bln, compared to €1.563bln the previous year. Operations generated €1.781bln of free cash flow. Currency fluctuations impacted the Group by -338mln, but overall CEO Philippe Petitcolin was most happy when announcing the results.
Of the divisions that are of interest to commercial aircraft, Propulsion grew revenues from €9.357bln to €10.452bln. The main driver behind this was higher sales (3.211 LEAP engines) and higher deliveries, including 1.118 CFM LEAPs. While the output of the old and faithful CFM56 was reduced to 1.044 from 1.444 in 2017, the model got a few orders for spare engines.
Yet, results could have been better without a serious hick-up in LEAP production, which resulted in a 5-week delay last Spring of which Safran has been able to recover only by a week or so. The result of this has been countless engine-less gliders at Airbus and Boeing A320neo and MAX production sites for many months in 2018. In its outlook for 2019, Safran still expects a negative margin on LEAP deliveries and a negative operating income of €50-100mln.
At Aircraft Equipment, revenues increased by 2.6% to €5.395bln, but currency impact was the highest here. The biggest contributor to growth was higher output (438) of nacelles for the A320neo, with production of those for the A330neo (18) only just starting up.
Landing gear and wiring for the A320 and Boeing 787 also positively contributed to the net result, while the lower rate of production of the A380 (12 last year) had a negative impact. Safran strengthened its position as the leader in carbon brakes for 100+ seat airliners, delivering almost 9.700 over the year.
Analysts looked with great interest at the Aircraft Interiors division and the integration of Zodiac Aerospace seat and cabin parts, which was formalized in 2018. Division revenues were €2.014bln, recurring operating income €20mln. While on target to meet synergies planned for 2022 (calculated at €250mln), integration of Zodiac needs further optimization to restore confidence with customers. The cabin-section reported improvements on output of A350 lavatories as well as A320 and A220 products, while the seats division is recovering too despite lower volumes.
R&D at Safran reached €1.472bln last year, of which €1.226bln was self-funded before benefiting from a tax credit.
For 2019, Safran expects a 7 to 9% increase in revenue, mainly thanks to Zodiac having become a part of the company for the full year now. Delivery of more LEAPs is expected, aftermarket sales will grow 5-9% and Interiors is targeting new orders to increase revenue growth.
Safran CEO Philippe Petitcolin presents the 2018 results. (Cyril Abad/CAPA Pictures)
