French aerospace supplier Safran SAF.PA posted a 7.1% increase in underlying profit in 2021, despite a drop in sales worsened by a freeze in deliveries of Boeing’s 787 and a sluggish recovery in demand for other long-haul jets.
The maker of engines for passenger and fighter jets, as well as a raft of equipment from escape slides to lie-flat business seats, said its recurring operating income rose to 1.805 billion euros ($2 billion) from 1.686 billion as margins grew to 11.8% from 10.2%.
Revenues fell 7.5% to 15.257 billion euros led by lower demand for equipment such as the landing gear that Safran makes for Boeing’s 787 – which is mired in production and regulatory problems – and the cabins it designs for long-distance jets.
Analysts had on average expected operating profit of 1.75 billion euros on sales of 15.4 billion, according to Refinitiv data.
Long-haul travel remains weak in the aftermath of COVID-19 travel restrictions, while Safran said it expected demand for smaller narrowbody jets to reach pre-crisis levels by end-2022.
Chief Executive Olivier Andries said Safran, which co-produces engines for all Boeing and some Airbus narrowbody jets through its CFM joint venture with General Electric GE.N, was ready to raise production rates in 2022, without elaborating.
Safran has agreed to support a roughly 50% increase in Airbus narrowbody production to 65 a month by summer 2023, but has clashed with Airbus about whether to keep increasing output beyond then due to worries about the impact on repair revenues.
In a results statement, Andries also said Safran would continue to reinvest capital from asset sales into “complementary, bolt-on acquisitions with growth potential”.
The engine maker’s widely watched civil aftermarket grew 7.1% in dollar terms in 2021 and Safran said it expected the figure for repairs and servicing to rise by 25-30% this year.
It predicted total 2022 revenue of 18-18.2 billion euros and a recurring operating margin of 13%.
($1 = 0.8902 euros)
