Safran - 2025 outlook revised upwards

PRESS RELEASE

Safran reports its full-year 2024 results

-          Record levels reached for revenues, profits and free cash flow 

-          2025 outlook revised upwards: profits and free cash flow raised

Paris, February 14, 2025

The Board of Directors of Safran (Euronext Paris: SAF), under the Chairmanship of Ross McInnes, at their meeting in Paris on February 13, 2025, adopted and authorized the publication of Safran’s financial statements and adjusted income statement for the full-year period ended December 31, 2024.

Foreword 

§  All figures in this press release represent adjusted data, except where noted. Please refer to the definitions and reconciliation between full-year 2024 consolidated income statement and adjusted income statement. Please refer to the definitions contained in the footnotes and in the Notes on page 10 of this press statement. 

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

CEO Olivier Andriès said: “Thanks to the efforts of our teams and despite persistent supply chain difficulties as well as residual inflationary pressures, Safran delivered another remarkable year with revenues, profits and cash flows reaching record levels. The operating margin grew by 150 basis points to 15.1% of sales, driven especially by strong aftermarket activity across the board, a relentless focus on operational excellence and the return to profitability of Aircraft Interiors. In 2025, meeting our airframer and airline customers’ requirements and improving industrial performance in both original equipment and MRO remain our priorities to continue our profitable growth. In terms of capital deployment, we expect to close the Collins' actuation and flight control activity by mid-year, propose to our forthcoming shareholder’s Annual Meeting a €2.90 dividend per share, and initiate the execution of our €5 billion share buyback program.”

Full-year 2024 results

Ø Revenue

2024 revenue stood at €27,317 million, up by 17.8% compared to 2023 (+17.1% on an organic basis). Change in scope was €136 million^[1]. Currency impact was €12 million, with an average €/$ spot rate of 1.08 in 2024 (stable compared to 2023). €/$ hedge rate in 2024 stood at 1.12 (1.13 in 2023).

As for organic revenue per division: 

§ Propulsion was up by 15.0% driven by civil aftermarket. 

Supported by strong air traffic momentum, civil aftermarket (in $) increased by 24.9% (21.1% in Q4 2024). Referring to our new civil engines aftermarket indicators, Services (in $) were up by

38.0% led by LEAP rate per flight hour (RPFH) contracts and Spare parts (in $) were up by

16.5%, with growth mainly attributable to CFM56 and high-thrust engines. 

1,407 LEAP engines were delivered compared to 1,570 in 2023, down (10)% with 378 units delivered in Q4 2024. Lower volume was more than offset by customer mix and price. On December 9, the FAA and EASA certified the High Pressure Turbine hardware durability kit for the LEAP-1A engines that power A320neo.

Military engine revenue increased year-over-year, reflecting a higher level of services and a favorable OE customer mix, while M88 deliveries remained stable, with 40 deliveries compared to 42 in 2023.

Finally, helicopter engine revenue growth was led by higher turbine deliveries (notably Arriel) and service by the hour contracts. 

§  Equipment & Defense was up 17.7%, supported by all businesses.

Driven by increased air traffic notably in the widebody market, aftermarket services rose by 16.8% with growth across the board, particularly in landing systems, support for defense and avionics activities, and electrical & power systems.

OE sales grew 18.3%, boosted by higher volumes in nacelles (G700 entry into service in H1, A320neo) and electrical systems (787 and A320neo). In defense activities, the substantial growth was primarily led by guidance systems, optronics and onboard systems.

§  Aircraft Interiors saw a solid 25.2% growth, although still 5% below 2019 levels. This growth reflects the recovery of the widebody market and airlines' eagerness for cabin retrofitting. Aftermarket activities grew by 26.3% driven by both Cabin and Seats (mainly spare parts).  OE sales growth of 24.5% is primarily attributed to Seats, with a significant increase in Business class seat deliveries (2,482 units in 2024 vs 983 in 2023). 

Ø Research & Development

Total R&D, including R&D sold to customers, reached €1,980 million, compared with €1,818 million in 2023. 

Self-funded R&D expenses before tax credits were up 11% at €1,348 million in 2024 including:

§ Research & Technology (R&T) self-funded expenses at €671 million (€598 million in 2023) mainly geared towards decarbonization through notably the RISE (Revolutionary Innovation for Sustainable Engines) technology development program; § Development expenses at €677 million (€618 million in 2023).

The impact on recurring operating income of expensed R&D was €1,128 million (€993 million in 2023), with both higher capitalized R&D and related amortization, and representing 4.1% of sales (4.3% of sales in 2023). 

Ø Recurring operating income

In 2024, recurring operating income reached €4,119 million, representing a substantial increase of +30.1% (+27.0% organic). This robust performance was mainly due to growth in services across the board and a relentless focus on operational excellence. It includes scope changes of €15 million and a favorable currency impact of €82 million.

Operating margin stood at 15.1% of sales, up 150bps (13.6% in 2023).

Per division:

§  Propulsion recurring operating income reached €2,819 million. Operating margin stood at 20.6% of sales, up by 0.5pt, supported by strong civil aftermarket activity benefitting from higher spare parts sales for CFM56. The share of LEAP RPFH contracts increased in 2024 with no margin recognition. As announced during the CMD’24, Safran will start recognizing profit for the LEAP-1A in 2025. 

Growth in military services and in both OE and services for helicopter engines also contributed to the overall performance.

§  Equipment & Defense recurring operating income stood at €1,298 million. At 12.2% of sales, operating margin increased by 1.0pt driven by increased OE volumes, particularly in nacelles and Defense activities, as well as growth in services, notably landing gear and carbon brakes. Both OE and services for Aerosystems contributed positively, thanks to Fluid and Fuel systems and Safety systems.

§  Aircraft Interiors posted a positive recurring operating income of €27 million, representing a substantial improvement of €143 million from 2023.  

Cabin’s profitability was supported by a strong level of activity in services notably for galleys as well as Water & Waste activities, and by impact of past restructuring. 

Seats strongly improved in 2024 reaching breakeven thanks to both services and OE volume. Continued efforts in the industrialization and engineering process are bearing fruits. 

Additionally, Safran Passenger Innovations made a positive contribution to recurring operating income, largely due to in-flight entertainment (IFE) products.

Ø Net income 

In 2024, one-off items were €6 million including capital gain on asset disposal (Roxel), impairment charges for certain programs as well as other costs such as restructuring and integration expenses.

Net income (Group share) was up by 51% at €3,068 million in 2024 (basic EPS of €7.37 and diluted EPS of €7.29), compared with €2,028 million in 2023 (basic EPS of €4.85 and diluted EPS of €4.70).  

This includes:

§  Financial income of €23 million, including positive net financial interest of €157 million (returns on cash investments exceed cost of debt) and €(106) million exchange revaluation of positions in the balance sheet;

§  Tax expense of €(987) million (23.8% apparent tax rate).

The reconciliation between 2024 consolidated income statement and adjusted income statement is provided and commented in the Notes on page 11.

Ø Free cash flow

Free cash flow of €3,189 million was driven by the increase in cash flow from operations, higher capital expenditures of €(1,543) million (€(1,325) million in 2023) directed notably towards MRO production capacity and low carbon initiatives.  

The slight favorable working capital change (€7 million) reflects higher customer advance payments

(notably Rafale) and deferred income, offset by inventory level build-up in line with revenue growth.

Ø Net debt and financing

As of December 31, 2024, Safran’s balance sheet exhibits a €1,738 million net cash position (vs. €374 million as at December 31, 2023), as a result of a strong free cash flow generation, partially offset by dividend payment (of which €911 million to shareholders of the parent company) and €1,320 million of share repurchases including €750 million for cancellation.

Cash and cash equivalent stood at €6,514 million (vs €6,676 million as at December 31, 2023). Gross debt stood at €4,776 million (vs €6,302 million as at December 31, 2023). During the year, Safran reimbursed $505 million of USPP, €200 million of Euro Private Placement and proceeded with the early redemption of its bonds convertible into shares initially due 15 May 2027 (2027 OCEANEs), resulting in a net debt positive impact of €961 million and no dilution impact for existing shareholders.

Ø Consolidated data (IFRS)

Consolidated revenue for 2024 was €27,716 million compared with €23,651 million in 2023. In 2024, the difference between consolidated revenue and adjusted revenue reflects a €399 million positive impact resulting from foreign currency hedging transactions.

Consolidated recurring operating income for 2024 was €4,186 million compared with €3,309 million in 2023. The difference between consolidated recurring operating income and adjusted recurring operating income reflects:

§  Amortization charged against intangible assets measured when allocating the purchase price for business combinations, representing €327 million;

§  A €394 million positive impact resulting from foreign currency hedging transactions.

Consolidated net income for 2024 was €(667) million (€3,444 million in 2023). It includes changes in the fair value of instruments hedging future cash flows that will be recognized in profit or loss in future periods of €(4,670) million (excluding tax). Consolidated basic EPS for 2024 was €(1.60) (diluted EPS of €(1.60) compared with €8.24 in 2023 (diluted EPS of €8.07).

Currency hedges

The hedge book amounts to $54.7 billion in December 2024 ($54.0 billion in September 2024). 

§  2024 hedge rate of $1.12, for a net exposure of $12.4 billion.  

§  2025 to 2027 are fully hedged: targeted hedge rate of $1.12, for an estimated net annual exposure of $14.0 billion.

§  2028 is partially hedged: $12.7 billion hedged, at a targeted hedge rate of $1.12, out of an estimated net exposure of $14.0 billion.

Dividend

For fiscal year 2024, a dividend^[2] payment of €2.90 per share will be proposed to the shareholders’ vote at the Annual General Meeting on May 22, 2025. It represents an increase of 32% over the prior year dividend (€2.20) and 40% payout ratio on the adjusted net income. It demonstrates Safran’s confidence and commitment to regular shareholder returns. 

Share repurchase programmes

Ø 2024

In 2024, Safran purchased c.€1.3 billion worth of its own shares in several tranches (6.5 million shares):

§  Hedging of the 2028 OCEANEs: 2.1 million shares (out of c.4 million), completing the hedging of the potential dilution relating to the 2028 OCEANE.

§  Performance shares & free shares grant: 0.7 million shares.

§  Share buyback for cancellation: 3.6 million shares (representing €750 million), all cancelled on December 12, 2024. The cancellation of these shares resulted in a 0.86% accretion of equity ownership percentages.

At December 31, 2024, Safran’s share capital comprises 423,632,587 shares of which 6,857,467 treasury shares (1.6% of capital).

Ø 2025 onwards

During its Capital Markets Day held on December 5, 2024, Safran announced a new €5 billion share buyback for cancellation from 2025 to 2028^[3]. 

In that context, on January 9, 2025, Safran launched a first tranche for a maximum amount of €350 million to be carried out from January 10, 2025 and no later than April 14, 2025.

Portfolio management

§  Divestment of Safran’s 50% share of Roxel to MBDA on December 19, 2024.

§  Agreement signed on December 20, 2024 with Woodward for the divestment of Safran’s electromechanical actuation business based in the United States, Mexico and Canada. The transaction is another important milestone towards the closing of the acquisition by Safran of Collins Aerospace’s actuation and flight control activities. It is expected to be closed in mid-2025, once all customary terms and conditions of the agreement are met and regulatory requirements are fulfilled, and subject to concomitant completion of Collins Aerospace’s actuation and flight control activities acquisition by obtaining associated merger control approvals. 

§  As part of the Collins Aerospace’s actuation and flight control activities acquisition process, following the approval by the Committee on Foreign Investment in the United States (CFIUS) of the acquisition project by decision on January 16, 2025, all approvals related to foreign investments have been obtained (including in Italy and United Kingdom).The completion of Collins Aerospace’s actuation and flight control activities acquisition remains subject to obtaining the required merger control approvals.

§  On January 19, 2025, Safran closed the acquisition of the US Company CRT (Component Repair Technologies), a world leader in the repair of aircraft engine parts, based in Ohio, USA. This acquisition reflects Safran’s plan to strengthen its maintenance, repair and overhaul (MRO) capabilities in the Americas. 

Full-year 2025 outlook

Safran raises its outlook and now expects to achieve for full-year 2025 (at constant scope, i.e.

excluding the contemplated acquisition of Collins Aerospace’s actuation & flight controls business): § Revenue growth: around 10%; 

§  Recurring operating income: €4.8 - €4.9 billion (versus €4.7 - €4.8 billion previously); 

§  Free Cash Flow €3.0 - €3.2 billion (versus €2.8 - €3.0 billion previously), of which €(380) - €(400) million estimated impact from the French corporate surtax (versus €(320) - €(340) million) and subject to payment schedule of some advance payments and the rhythm of payments by stateclients.

This outlook is based notably, but not exclusively, on the following assumptions:

§  LEAP engine deliveries: up 15% to 20% compared to 2024;

§  “Spare parts” revenue (in USD): up HSD+^[4] (versus up MSD-HSD^[5]);

§  “Services” revenue (in USD): up mid-teens; § €/$ spot rate of 1.10;  § €/$ hedge rate of 1.12.

The main risk factor is the supply chain production capability. In addition, this 2025 outlook excludes any potential impact of new tariffs implementation.

* * * *

Agenda

Q1 2025 revenue                                              April 25, 2025

Annual General Meeting                                    May 22, 2025

H1 2025 results                                                July 31, 2025

Q3 2025 revenue                                              October 24, 2025

FY 2025 results                                                February 13, 2026

* * * *

Safran will host today a webcast for analysts and investors at 8.15am 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/q738a99n 

ð 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 preregister using the link below in order to receive by email the connection details (dial-in numbers and personal passcode): https://register.vevent.com/register/BIde4729cecf114a68b501c35e834bf3fc 

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, consolidated financial statements and presentation are available on Safran’s website at www.safran-group.com(Finance section).

* * * *

Key figures

1. Adjusted income statement, balance sheet and cash flow

⁽¹⁾ Based on the weighted average number of shares of 417,795,492 as of December 31, 2023

⁽²⁾ Based on the weighted average number of shares of 416,149,530 as of December 31, 2024

⁽³⁾ Based on the weighted average number of shares after dilution of 431,373,561 as of December 31, 2023

⁽⁴⁾ Based on the weighted average number of shares after dilution of 420,722,353 as of December 31, 2024

2.    Segment breakdown

3.    Number of products delivered on major aerospace programs

4.    Research & Development

5.    Civil Aftermarket indicators

Notes

Adjusted data:

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.

Readers are reminded that Safran:

•      is the result of the May 11, 2005 merger of Sagem SA and Snecma, accounted for in accordance with IFRS 3, “Business Combinations” in its consolidated financial statements;

•      recognizes, as of July 1, 2005, all changes in the fair value of its foreign currency derivatives in

“Financial income (loss)”, in accordance with the provisions of IFRS 9 applicable to transactions not qualifying for hedge accounting (see Note 2.f, “Translation of foreign currency transactions and foreign currency derivatives”).

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

•      purchase price allocations with respect to business combinations. Since 2005, this restatement concerns the amortization charged against intangible assets relating to aircraft programs remeasured at the time of the Sagem-Snecma merger. With effect from the first half 2010 interim financial statements, the Group decided to restate:

-          the impact of purchase price allocations for business combinations, particularly amortization and depreciation charged against intangible assets and property, plant and equipment recognized or remeasured at the time of the transaction and amortized or depreciated over extended periods due to the length of the Group’s business cycles, and the impact of remeasuring inventories, as well as

-          gains on remeasuring any previously held equity interests in the event of step acquisitions or asset contributions to joint ventures;

•      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.

FY 2024 reconciliation between consolidated income statement and adjusted consolidated income statement:

(1) Remeasurement of foreign-currency denominated revenue net of purchases (by currency) at the hedged rate (including premiums on unwound options) through the reclassification of changes in the fair value of instruments hedging cash flows recognized in profit or loss for the period.

(2) Changes in the fair value of instruments hedging future cash flows that will be recognized in profit or loss in future periods

(€4,670 million excluding tax), and the impact of taking into account hedges when measuring provisions for losses on completion (a positive €10 million at December 31, 2024).

(3) Cancellation of amortization/impairment of intangible assets relating to the remeasurement of aircraft programs resulting from the application of IFRS 3 to the Sagem SA-Snecma merger.

(4) Cancellation of the impact of remeasuring assets at the time of the Zodiac Aerospace acquisition for €182 million excluding deferred tax and cancellation of amortization/impairment of assets identified during other business combinations. 

Readers are reminded that the condensed interim consolidated financial statements are subject to review by the Group’s Statutory Auditors. The condensed interim consolidated financial statements include the revenue and operating profit indicators set out in the adjusted data in Note 4, “Segment information and adjusted data”. 

Adjusted financial data other than the data provided in Note 4, “Segment information and adjusted data” are subject to the verification procedures applicable to all of the information provided in the interim report.          

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 100,000 employees and sales of 27.3 billion euros in 2024, 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. 

For more information : www.safran-group.com

              @SAFRAN                 Safran           GroupeSafran              Safran_group

Press

Catherine Malek / catherine.malek@safrangroup.com / +33 1 40 60 80 28

Investor Relations 

Armelle Gary / armelle.gary@safrangroup.com / +33 1 40 60 82 46

Florent Defretin / florent.defretin@safrangroup.com / +33 1 40 60 27 30

Baptiste Delpierre / baptiste.delpierre@safrangroup.com / +33 1 40 60 27 26 

FORWARD-LOOKING STATEMENTS

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 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.