Safran reports first quarter 2024 revenue - Solid momentum continues: guidance confirmed

Safran reports first quarter 2024 revenue - Solid momentum continues: guidance confirmed.

2-digit revenue growth in all businesses

Full-year 2024 outlook reaffirmed

Q1 2024 adjusted data

Revenue EUR6,220 million, up 18.1% (19.1% organic)

Q1 2024 consolidated data

Revenue: EUR6,280 million

Organic variations exclude changes in scope and currency impacts for the period.

CEO Olivier Andries said: 'Safran had another strong start of the year, with double-digit revenue growth in all businesses and civil aftermarket benefitting from the continued good dynamics in air traffic and an increasing contribution of CFM flight hour contracts. LEAP engines delivery volumes reflect the soft start of aircraft production. We remain focused on meeting our customer commitments and mitigating short term challenges and are confident to deliver our financial performance for the year.'

Q1 2024 revenue

At EUR6,220 million, Q1 2024 revenue increased by 18.1% compared to Q1 2023. Changes in scope during the quarter1 balance each other out, resulting in no impact at Group level. Currency impact of EUR(51) million reflects a negative translation impact of USD revenues, with an average EUR/$ spot rate of 1.09 in Q1 2024 (1.07 in Q1 2023). EUR/$ hedge rate in Q1 2024 stood at 1.12 (1.13 in Q1 2023).

On an organic basis, revenue increased by 19.1%, of which:

Propulsion revenue increased by 15.4% thanks to strong civil aftermarket activity (+27.3% in $). This strong growth came in particular from LTSA2 for CFM56 and LEAP engines, a trend that should subside from the second quarter onward. Revenue from spare parts for CFM56 and high-thrust engines was in line with expectations. This quarter's performance has no impact on full-year expectations.

LEAP deliveries were stable at 367 units, compared to 366 units in Q1 2023 reflecting the soft start of the year of aircraft production.

Military activities were down compared to Q1 2023 with notably fewer M88 deliveries related to contract phasing.

Helicopter turbine activities grew slightly thanks to OE and to a lesser extent to services, both still penalized by supply chain difficulties.

Equipment & Defense posted significant growth (+22.7%) coming from all activities.

OE sales registered a 26.7% increase year over year supported by both narrowbody and widebody programs and a low comparison basis in Q1 2023. Volumes were up for landing gears (A320neo, A350, 787), power and wiring (A320neo, 787), avionics (FADEC for LEAP) as well as nacelles (A330neo). Electrical systems deliveries were impacted by lower 737MAX shipsets. Revenue in Defense were up significantly, led by guidance systems, JIM multifunction infrared binoculars and optronics activities.

Services sales, driven by a continuing positive trend in air traffic, grew in all businesses, in particular landing gears and nacelles.

Aircraft Interiors revenue increased by 23.8% but still remains 10% below 2019 level. Growth was mainly driven by services from all activities, notably in Seats.

OE sales improved thanks to Cabin (Custom Cabin and galleys) and, to a lesser extent, to Seats. Business class seat deliveries were down to 242 units from 324 in Q1 2023.

Currency hedges

The hedge book amounts to $51.7 billion in March 2024, compared to $54 billion in December 2023.

2024 is hedged: targeted hedge rate is $1.12, for an estimated net exposure of $12.0 billion.

2025 to 2027 are hedged: targeted hedge rate between $1.12 and $1.14, for an estimated net annual exposure of $13.0 billion.

2028 is partially hedged: $3.2 billion hedged out of an estimated net exposure of $13.0 billion.

Share repurchase programs

In 2024, Safran launched a new share buyback tranche to complete the hedging of the potential dilution related to the 2028 convertible bonds and for long term incentive plans. As such, Safran bought back approximately EUR141 million worth of its own shares. The execution of this tranche was interrupted as the maximum repurchase price (EUR175) authorized by the general meeting of May 25, 2023 has been exceeded. If market conditions permit and if resolution no. 16 proposing to shareholders to set the maximum repurchase price at EUR300 per share is approved at the general meeting of May 23, 2024, Safran plans to complete this tranche in 2024.

As announced in July 2023, Safran will then launch a EUR1 billion share buyback for cancellation; this buyback is expected to be carried out during 2024 and 2025.

As of March 31, 2024, Safran held 14 million of treasury shares.

Portfolio management

On February 29, 2024, Safran closed the acquisition of Air Liquide aeronautical oxygen and nitrogen activities (to be consolidated within Equipment & Defense).

Full-year 2024 outlook

Safran confirms its full-year 2024 outlook) (at constant scope of consolidation, adjusted data): Revenue around EUR27.4 billion; Recurring operating income close to EUR4.0 billion; Free cash flow around EUR3.0 billion, subject to payment schedule of some advance payments.

This outlook is based notably, but not exclusively, on the following assumptions:: LEAP engine deliveries: up by 10%-15% (previously 20-25%); Civil aftermarket revenue (in USD): up by around 20%; EUR/$ spot rate of 1.10; EUR/$ hedge rate of 1.12.

The main risk factor remains the supply chain production capabilities.

Agenda

Annual General Meeting May 23, 2024

H1 2024 results July 31, 2024

Q3 2024 revenue October 25, 2024

FY 2024 results February 14, 2025

IMPORTANT ADDITIONAL INFORMATION

This document contains forward-looking statements relating to Safran, which do not refer to historical facts but refer to expectations based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those included in such statements. These statements or disclosures may discuss goals, intentions and expectations as to future trends, synergies, value accretions, plans, events, results of operations or financial condition, or state other information relating to Safran, based on current beliefs of management as well as assumptions made by, and information currently available to, management. Forward-looking statements generally will be accompanied by words such as 'anticipate,' 'believe,' 'plan,' 'could,' 'would,' 'estimate,' 'expect,' 'forecast,' 'guidance,' 'intend,' 'may,' 'possible,' 'potential,' 'predict,' 'project' or other similar words, phrases or expressions. Many of these risks and uncertainties relate to factors that are beyond Safran's control. Therefore, investors and shareholders should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: uncertainties related in particular to the economic, financial, competitive, tax or regulatory environment; the risks that the new businesses will not be integrated successfully or that the combined company will not realize estimated cost savings and synergies; Safran's ability to successfully implement and complete its plans and strategies and to meet its targets; the benefits from Safran's plans and strategies being less than anticipated; the risks described in the Universal Registration Document (URD); the full impact of the outbreak of the COVID-19 pandemic.

The foregoing list of factors is not exhaustive. Forward-looking statements speak only as of the date they are made. Safran does not assume any obligation to update any public information or forward-looking statement in this document to reflect events or circumstances after the date of this document, except as may be required by applicable laws.

USE OF NON-GAAP FINANCIAL INFORMATION

This document contains supplemental non-GAAP financial information. Readers are cautioned that these measures are unaudited and not directly reflected in the Group's financial statements as prepared under International Financial Reporting Standards and should not be considered as a substitute for GAAP financial measures. In addition, such non-GAAP financial measures may not be comparable to similarly titled information from other companies.

Contact:

Catherine Malek

Safran

Email: [e-mail]

Armelle Gary

Safran

Tel: [phone]

Email: [e-mail]

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 92 000 employees and sales of 23.2 billion euros in 2023, 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

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