Warning This site is not recommended for Internet Explorer browsers. Please use another web browser to get a better experience.

Safran reports third quarter 2023 revenue - Significant civil aftermarket demand

Finance

Paris, October 27, 2023

 

Adjusted data

  • Q3 revenue: €5,825 million up 20.1% (25.9% organic)
  • 9m revenue: €16,770 million up 25.1% (25.9% organic)

 

Consolidated data

  • Q3 revenue: €5,937 million 
  • 9m revenue: €17,066 million
     
  • Full-year 2023 outlook reaffirmed

 

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 2023 consolidated revenue and adjusted revenue contained in the footnotes and in 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: “Safran continues to enjoy strong market tailwinds with narrowbody air traffic now trending well above pre-crisis level resulting in a strong demand for CFM56 spare parts. Our priority remains to ramp-up production while we still operate in a constrained supply chain environment. On the back of this solid 9 months, we are comfortable with the delivery of our 2023 guidance raised at the end of July.

 

Q3 and 9m 2023 revenue

The global narrowbody capacity has gradually improved to well above 2019 level. In the first nine months of 2023, narrowbody ASK were at 104% (on average) of 2019, with Q3 2023 at 107% of Q3 2019.

 

Q3 2023

At €5,825 million, Q3 2023 revenue increased by 20.1% compared to Q3 2022. Change in scope was €(39) million1. Currency impact of €(241) million reflects a negative translation impact of USD revenues, with an average €/$ spot rate of 1.09 in Q3 2023 (1.01 in Q3 2022). €/$ hedge rate in Q3 2023 stood at 1.13 (1.15 in Q3 2022).

1 Divestment of Cargo & Catering in May 2023.

On an organic basis, revenue increased by 25.9%, of which: 

  • Propulsion was up 28.4% driven by a strong civil aftermarket activity (+39.0% in $) with solid demand for CFM56 spare parts and incremental benefits from price increase. Spare parts revenue for high thrust engines was slightly up. 
    LEAP deliveries reached 389 units, compared to 347 units in Q3 2022 and to 419 units in Q2 2023. Over the first nine months of 2023, LEAP deliveries reached 1,174 representing a solid step-up in production (+45%) versus last year.
    Military engine activities were globally stable compared to Q3 2022 with notably lower M88 deliveries and a higher services level.
    Helicopter turbine activities posted a reasonable growth despite persistent supply chain constraints impacting OE and MRO activities.
     
  • Equipment & Defense increased by 21.2% driven by aftermarket growth in all businesses. Aftermarket services were up 30% led by landing gears, carbon brakes and nacelles. 
    OE sales increased by 16% during the quarter with higher volumes in landing gear (A320neo, A350), as well as in power and wiring. Activities continued to be constrained by industry-wide supply chain difficulties and by downward revised demand impacting notably OE nacelles deliveries. 
    Electronics & Defense revenue was up mainly thanks to avionics (FADEC for LEAP) and Defense activities.
     
  • Aircraft Interiors revenue increased by 30.8% driven by aftermarket services both for Cabin (mainly spare parts) and Seats (of which A380 refresh for a Middle East airline). 
    OE sales improvement came notably from Cabin (Custom Cabin, Floor to Floor activities for 787, A320 and Bombardier programs). Seats OE activities increase was driven by Economy class seat deliveries (Z400 and Z600 for several airlines) while Business class seat deliveries stood at 174 in Q3 2023 (377 in Q3 2022) and were up sequentially (112 in Q2 2023).

 

9m 2023

Revenue for the first nine month of 2023 amounted to €16,770 million, up 25.1% compared to 9m 2022. Sales increased by €3,477 million (+25.9%) on an organic basis mainly thanks to Propulsion (o/w civil aftermarket, +37.5% in $). Change in scope was €(11) million2. Currency impact of €(105) million reflects a negative translation impact of USD revenues, with an average €/$ spot rate of 1.08 in 9m 2023 (1.06 in 9m 2022). €/$ hedge rate in 9m 2023 was at 1.13 (1.15 in 9m 2022). 

2 Divestment of Pioneer Aerospace in April 2022, Arresting Systems in June 2022 and Cargo & Catering in May 2023. Acquisition of Orolia in July 2022.

 

Full-year 2023 outlook

Safran confirms its full-year 2023 outlook, as raised on July 27th 2023 (adjusted data):

  • Revenue of at least €23.0 billion; 
  • Recurring operating income of c.€3.1 billion; 
  • Free Cash Flow of at least €2.7 billion.

This outlook is based notably, but not exclusively, on the following assumptions, of which two are updated:

  • No further disruption to the world economy;
  • Air traffic: narrowbody ASK above 2019 level in 2023;
  • LEAP engine deliveries: increase by 40% to 45% (versus increase by c.50%);
  • Civil aftermarket revenue (in USD): up low thirties (versus up mid to high twenties); 
  • €/$ hedge rate of 1.13;
  • €/$ spot rate of 1.10.

The main risk factor remains the supply chain production capabilities.

 

Currency hedges

The hedge book amounts to $50.5 billion in October 2023 ($50.7 billion in June 2023):

  • 2023 is hedged: targeted hedge rate of $1.13, for an estimated net exposure of $10.0 billion.
  • 2024 is hedged: targeted hedge rate between $1.13 and 1.15, for an estimated net exposure of $11.0 billion.
  • 2025 and 2026 are hedged: targeted hedge rate between $1.12 and 1.14, for a respective estimated net exposure of $12.0 billion and $13.0 billion.
  • 2027 is almost fully hedged: $12 billion hedged out of an estimated net exposure of $13.0 billion.

 

Share repurchase programs

 

Employee profit sharing schemes

In Q3 2023, Safran repurchased c.2 million shares for a total of €300 million for allocation or sale to employees or corporate officers.

 

2028 OCEANEs liability management

In order to hedge the potential dilution related to its 2028 convertible bonds, Safran launched a first tranche of shares repurchase for a maximum amount of €350 million from September 25 and no later than November 17, 2023. As of October 23, Safran already repurchased c.1.5 million shares representing c.€217 million.

As announced in July, once the above mentioned program relating to the 2028 OCEANEs is completed, Safran will launch a share buyback program for cancellation. This program of up to €1 billion is due to be completed by end 2025.

 

Portfolio management

On October 2, 2023, Safran completed the acquisition of Thales' aeronautical electrical systems business, which covers electric conversion, power generation, and motors for civil and military aircraft. This acquisition reinforces Safran Electrical & Power's expertise, particularly in conversion, strengthening its position as a leader in the entire aircraft electrical chain. This activity employs nearly 600 people and generated revenues of €145 million in 2022.

 

****

Agenda

  • FY 2023 results : February 15, 2024
  • Q1 2024 revenue : April 26, 2024                
  • Annual General Meeting : May 23, 2024
  • H1 2024 results : July 31, 2024
  • Q3 2024 revenue : October 25, 2024
  • Capital Markets Day : Q4 2024

****

Safran will host today a webcast for analysts and investors at 8.30 am CET. 

  1. If you only want to follow the webcast and listen the conference call, please register using the following link: https://edge.media-server.com/mmc/p/6gaopwz3
    Use this same link for the replay which will be available 2 hours after the event concludes and remains accessible for 90 days. 
     
  2. If you want to participate in the Q&A session at the end of the conference, please pre-register using the link below in order to receive by email the connection details (dial-in numbers and personal passcode):
    https://register.vevent.com/register/BId5c4d209de9b4997a03d54176e869df9

Registration links are also available on Safran’s website under the Finance home page as well as in the "Publications and Results" and "Calendar" sub-sections.

Press release and presentation are available on Safran’s website at www.safran-group.com (Finance section).

 

Key figures

 

1. Segment breakdown

 

Segment breakdown of adjusted revenue
(In Euro million)
9m 2022 9m 2023 % change % change
in scope
% change
currency
% change
organic
Propulsion 6,679 8,760 31.2% - (0.8)% 32.0%
Equipment & Defense 5,326 6,234 17.0% 0.7% (0.4)% 16.7%
Aircraft Interiors 1,392 1,768 27.0% (3.5)% (2.2)% 32.7%
Holding company & Others 12 8 n/s n/s n/s n/s
Total Group 13,409 16,770 25.1% (0.1)% (0.7)% 25.9%
OE / Services adjusted revenue breakdown
(In Euro million)
9m 2022 9m 2023
OE Services OE Services
Propulsion 2,451 4,228 3,478 5,282
% of revenue 36.7% 63.3% 39.7% 60.3%
Equipment & Defense 3,289 2,037 3,676 2,558
% of revenue 61.8% 38.2% 59.0% 41.0%
Aircraft Interiors3 976 416 1,144 624
% of revenue 70.1% 29.9% 64.7% 35.3%

3 Retrofit is included in OE

Segment breakdown of adjusted revenue
(In Euro million)
Q3 2022 Q3 2023 % change % change
in scope
% change
currency
% change
organic
Propulsion 2,503 3,083 23.2% - (5.2)% 28.4%
Equipment & Defense 1,820 2,134 17.3% - (3.9)% 21.2%
Aircraft Interiors 522 605 15.9% (7.5)% (7.4)% 30.8%
Holding company & Others 4 3 n/s n/s n/s n/s
Total Group 4,849 5,825 20.1% (0.8)% (5.0)% 25.9%
OE / Services adjusted revenue breakdown
(In Euro million)
Q3 2022 Q3 2023
OE Services OE Services
Propulsion 944 1,559 1,093 1,990
% of revenue 37.7% 62.3% 35.5% 64.5%
Equipment & Defense 1,115 705 1,250 884
% of revenue 61.3% 38.7% 58.6% 41.4%
Aircraft Interiors4 363 159 381 224
% of revenue 69.5% 30.5% 63.0% 37.0%

3 Retrofit is included in OE

2023 revenue by quarter
(In Euro million)
Q1 2023 Q2 2023 Q3 2023 9m 2023
Propulsion 2,714 2,963 3,083 8,760
Equipment & Defense 1,966 2,134 2,134 6,234
Aircraft Interiors 584 579 605 1,768
Holding company & Others 2 3 3 8
Total Group 5,266 5,679 5,825 16,770
2022 revenue by quarter
(In Euro million)
Q1 2022 Q2 2022 Q3 2022 Q4 2022 FY 2022
Propulsion 1,942 2,234 2,503 2,827 9,506
Equipment & Defense 1,716 1,790 1,820 2,209 7,535
Aircraft Interiors 409 461 522 586 1,978
Holding company & Others 4 4 4 4 16
Total Group 4,071 4,489 4,849 5,626 19,035
Euro/USD rate Q3 2022 Q3 2023 9m 2022 9m 2023
Average spot rate 1.01 1.09 1.06 1.08
Spot rate (end of period) 0.97 1.06 0.97 1.06
Hedge rate 1.15 1.13 1.15 1.13

 

2. Number of products delivered on major aerospace programs

 

Number of units delivered Q3 2022 Q3 2023 % change
LEAP engines 347 389 12%
CFM56 engines 17 14 (18)%
High thrust engines 40 58 45%
Helicopter turbines 128 140 9%
M88 engines 9 8 (11)%
787 landing gears sets 6 6 -
A350 landing gears sets 8 11 38%
A330neo nacelles 10 12 20%
A320neo nacelles 153 126 (18)%
Small nacelles (biz & regional jets) 113 137 21%
A350 lavatories 53 99 x1.9
Business class seats 377 174 (54)%
A320 emergency slides 1,335 1,165 (13)%
787 primary power distribution system 31 65 x2.1
Number of units delivered 9m 2022 9m 2023 % change
LEAP engines 812 1,174 45%
CFM56 engines 44 38 (14)%
High thrust engines 131 141 8%
Helicopter turbines 355 414 17%
M88 engines 29 39 34%
787 landing gears sets 7 16 x2.3
A350 landing gears sets 31 34 10%
A330neo nacelles 38 38 -
A320neo nacelles 437 401 (8)%
Small nacelles (biz & regional jets) 383 407 6%
A350 lavatories 241 319 32%
Business class seats 1,195 610 (49)%
A320 emergency slides 3,415 2,622 (23)%
787 primary power distribution system 60 192 x3.2

 

Notes

Adjusted revenue:
To reflect the Group’s actual economic performance and enable it to be monitored and benchmarked against competitors, Safran prepares an adjusted income statement in addition to its consolidated financial statements.

Safran’s consolidated revenue has been adjusted for the impact of:

  • the mark-to-market of foreign currency derivatives, in order to better reflect the economic substance of the Group’s overall foreign currency risk hedging strategy:
    • revenue net of purchases denominated in foreign currencies is measured using the effective hedged rate, i.e., including the costs of the hedging strategy,
    • all mark-to-market changes on instruments hedging future cash flows are neutralized.

The resulting changes in deferred tax have also been adjusted.

Third-quarter 2023 and 9m 2023 reconciliation between consolidated revenue and adjusted revenue:

Q3 2023
(In Euro million)
Consolidated revenue Hedge accounting Business combinations Adjusted revenue
Remeasurement of revenue Deferred hedging gain (loss) Amortization intangible assets - Sagem- Snecma PPA impacts - other business combinations
Revenue 5,937 (112) - - - 5,825
9m 2023
(In Euro million)
Consolidated revenue Hedge accounting Business combinations Adjusted revenue
Remeasurement of revenue Deferred hedging gain (loss) Amortization intangible assets - Sagem- Snecma PPA impacts - other business combinations
Revenue 17,066 (296) - - - 16,770
Safran Revenue Q3 2023

Contact Us

Safran is an international high-technology group, operating in the aviation (propulsion, equipment and interiors), defense and space markets. Its core purpose is to contribute to a safer, more sustainable world, where air transport is more environmentally friendly, comfortable and accessible. Safran has a global presence, with 83 000 employees and sales of 19.0 billion euros in 2022, and holds, alone or in partnership, world or regional leadership positions in its core markets. Safran undertakes research and development programs to maintain the environmental priorities of its R&T and innovation roadmap. 

Safran is listed on the Euronext Paris stock exchange and is part of the CAC 40 and Euro Stoxx 50 indices.

  • © Free-Lance's / Safran
  • © Safran