Safran Seeks Alternative Rare Earth Suppliers Amid Geopolitical Tensions -- Update

By Cristina Gallardo

French aircraft-engine maker Safran said it is stocking up on rare earths and looking for alternative suppliers to protect the company from what its chief executive called a weaponization of the critical materials.

Concerns over the supply of rare-earth elements--needed in products ranging from fifth-generation fighter jets to submarines, radars and electrical motors--have risen among defense manufacturers in recent years as the critical materials landed on the frontline of trade battles.

Safran Chief Executive Olivier Andries said in a call with analysts Friday that the company wants to find alternative suppliers of rare earths, which he said have been weaponized by some countries as geopolitical tensions intensify.

"On rare earths, we are building stocks, we are also working on some alternative supply chains," Andries said. "Our compass is not only to continue to work on our competitiveness, but it is also to continue to work on our resilience."

China, which supplies around 90% of the world's rare earths, imposed export curbs last year and maintained a lock on the flows to Western defense manufacturers even as it allowed shipments for other uses as part of an agreement on a series of trade concessions with the Trump administration, The Wall Street Journal reported in August.

Andries said Safran's supply chain improved across the board over the course of last year, though it isn't yet where the company would want it to be.

Safran lifted its 2028 guidance, citing strong demand for jet engine services and weapons.

The company now expects adjusted recurring operating profit--its preferred measure of profitability--to range between 7 billion euros and 7.5 billion euros ($8.31 billion-$8.90 billion) in 2028. This compares with a previous estimated range of between 6 billion euros and 6.5 billion euros in 2028.

For this year, Safran forecast an adjusted recurring operating profit of between 6.1 billion euros and 6.2 billion euros, above company-compiled consensus estimates of 6.08 billion euros.

Shares rose 7.8% in morning trade in Europe, which would be their biggest one-day percentage gain in nearly four years if maintained until close.

Bernstein analysts said Safran is typically cautious when issuing guidance, which suggests there are chances of more increases until 2028.

Safran is benefiting from record levels of air traffic and airlines' interest in maintaining older airplanes, amid delays in the production of new aircraft.

The company, which co-makes engines for Airbus planes, said deliveries of LEAP engines continue to ramp up and reached a record level in 2025 at 1,802. This number is expected to increase to around 2,600 in 2028, it said.

The war in Ukraine and a global race to rearm are also boosting Safran's order books. The company is increasing production of its AASM Hammer guided-air bombs, which can be fitted in Dassault Aviation's Rafale jets and are being provided to Ukraine for use on its older Soviet fighter aircraft.

Andries said the Hammer bombs are extremely successful in export markets, citing a recent order from Norway for hundreds of them. He said Safran had quadrupled production of the Hammer bombs over the last 3 years and will continue to scale it up.

Safran's defense business is also benefiting from higher demand for missile seekers, as well as navigation and timing systems.

The company reported an adjusted recurring operating profit of 5.20 billion euros in 2025, up 26% on the prior year, while adjusted revenue jumped 15% to 31.33 billion euros. It made a net profit of 7.18 billion euros, compared with a loss of 667 million euros a year before, when it booked a 4.67 billion-euro hit from foreign-exchange hedging.

Safran said it would raise its dividend by 16% to 3.35 euros a share.

Write to Cristina Gallardo at [e-mail]

(END) Dow Jones Newswires

02-13-26 0624ET