2021
INTERIM
FINANCIAL
REPORT
CONTENTS
Foreword | 6 | ||
Reconciliation of the consolidated income | |||
statement with the adjusted income | |||
statement | 7 | ||
1.1 | First-half 2021 results | 9 | |
1.2 | Business commentary | 11 |
1.3 Interim 2021 consolidated income
statement | 14 | |
1.4 | Balance sheet and cash flow | 15 |
1.5 | Currency hedges | 17 |
1.6 Full-year 2021 outlook confirmed for revenue and profitability, raised
for free cash flow | 17 |
1.7 Related-party transactions | 17 |
1.8 Bonds convertible into new Safran shares and/or exchangeable for existing
Safran shares | 18 |
2 | RISK | |
FACTORS | 27 | |
3 | INTERIM FINANCIAL | |
STATEMENTS | 28 | |
Consolidated income statement | 28 | |
Consolidated statement | ||
of comprehensive income | 29 | |
Consolidated balance sheet | 30 | |
Consolidated statement of changes | ||
in shareholders' equity | 31 | |
Consolidated statement of cash flows | 32 | |
Notes to the Group condensed interim | ||
consolidated financial statements | 33 | |
STATUTORY AUDITORS' | ||
REVIEW REPORT ON THE INTERIM | ||
4 FINANCIAL INFORMATION | 67 | |
5 | CORPORATE | |
GOVERNANCE | 68 | |
Safran's Ordinary and Extraordinary | ||
Shareholders' Meeting of May 26, 2021 | 68 | |
Membership structure of the Board | ||
of Directors and its standing committees | 69 | |
Share buyback program authorized by | ||
the Ordinary and Extraordinary Shareholders' | ||
Meeting of May 26, 2021 | 70 |
"The forecasts and forward-looking statements described in this document are based on the data, assumptions and estimates considered as reasonable by the Group as at the date of this document. These data, assumptions and estimates may evolve or change as a result of uncertainties related in particular to the economic, financial, competitive, tax or regulatory environment. The occurrence of one or more of the risks described in the Universal Registration Document may also have an impact on the business, financial position, results and prospects of the Group and thus affect its ability to achieve such forecasts and forward-looking statements. The Group therefore neither makes any commitment, nor provides any assurance as to the achievement of the forecasts and forward-looking statements described in this document."
The Interim Financial
Report is available on the website at
safran-group.com
DECLARATION BY THE PERSON RESPONSIBLE
"I certify that, to the best of my knowledge, the condensed interim consolidated financial statements have been prepared in accordance with the applicable accounting standards, and give a true and fair view of the assets and liabilities, and of the financial position and results of the Company and all its consolidated subsidiaries, and that the accompanying interim activity report provides a true and fair view of the main events of the first six months of the year, their impact on the condensed interim consolidated financial statements and the significant transactions with related parties, and also describes the main risks and uncertainties for the next six months."
Paris, July 28, 2021
Chief Executive Officer,
Olivier Andriès
2021 INTERIM FINANCIAL REPORT SAFRAN I 3
1 |
INTERIM 2021
ACTIVITY REPORT
FIRST-HALF 2021: REVENUE RECOVERY IN THE SECOND QUARTER AND CONTINUED DISCIPLINE ON COSTS AND CASH. FULL-YEAR 2021 OUTLOOK CONFIRMED
1. Air traffic data in first-half 2021
The recovery in traffic was mixed during the first half of 2021 and remained soft with a global upsurge in new Covid-19 variants during the first months of the year. The vaccine rollout across the world led to a traffic rebound through the second part of the half year, but at different paces across regions.
Narrowbody ASK(1) in first-half 2021
After starting the year at around 50% of their 2019 levels, narrowbody ASK reached a trough in February. From March onwards, narrowbody ASK have been improving. In June, narrowbody ASK were at 59.4% versus 2019.
Most recent trends in narrowbody traffic
Since June, trends in traffic compared to 2019 have shown strong improvement in Europe and stability in North America after a steady increase since the end of February. In Asia excluding China, the deteriorating health situation resulted in decreasing traffic, with CFM engine cycles down by 71% compared to 2019. In China, weekly cycles of CFM engines were lower than 2019 in June, but regained their 2019 levels in mid-July.
Weekly CFM engine flight cycles
As of July 18, 2021, weekly cycles compared to the same week in 2019:
- CFM56 fleet cycles are down 35%, improving from a 46% lag at April 25, 2021;
- LEAP fleet cycles are up 101%, improving from 56% at April 25, 2021.
2. Safran continues to adapt
To cope with the uncertainty in the pace of air traffic recovery, Safran is pursuing the efforts started in 2020:
- Continuing decrease in labor costs, consolidating savings achieved in 2020:
- headcount decrease versus December 31, 2020: 2,250 (including temporary staff);
- further short-time working in first-half 2021, but halved compared to last year: 7.9% on average worldwide and 10.4% on average in France in the first five months of the year, aligned with full-year 2021 assumptions.
- Continuous industrial footprint rationalization:
- site closures announced at Aircraft Interiors (Bellingham and Ontario (US)) and Electrical & Power (Santa Rosa (US));
- industrial plan optimization (Electrical & Power and Nacelles).
- Further very tight cost control in first-half 2021:
- R&D expenses down 5% compared to first-half 2020 and flat compared to second-half 2020;
- OPEX in first-half 2021 down 13% versus first-half 2020 and still 28% below the first-half 2019 level despite an increase compared to second-half 2020, notably due to lower short-time working;
- CAPEX commitments kept under control, allowing a decrease in cash out compared to first-half 2020.
(1) Available Seat Kilometers.
- I SAFRAN 2021 INTERIM FINANCIAL REPORT
KEY BUSINESS HIGHLIGHTS
1. Aerospace Propulsion
Narrowbody engine deliveries
At the end of June 2021, combined shipments of CFM56 and LEAP engines reached 448 units, compared with 534 in first-half 2020.
In first-half 2021, CFM International delivered:
- 399 LEAP engines compared with 450 engines in the year-ago period;
- 49 CFM56 engines (as planned) compared with 84 engines in first-half 2020.
CFM International LEAP-1A engines have been selected to power IndiGo's fleet of 310 new Airbus A320neo, A321neo and A321XLR aircraft. This agreement includes 620 new installed engines and associated spare engines, as well as a multi-year service agreement.
United Airlines announced that it will expand its Boeing 737 orders by purchasing an additional 200 737 MAX jets powered by CFM International LEAP-1B engines.
On June 14, 2021, GE Aviation and Safran announced a bold technology development program targeting more than 20% lower fuel consumption and CO2 emissions compared to current LEAP engines, as well as ensuring 100% compatibility with alternative energy sources such as sustainable aviation fuels. The CFM RISE (Revolutionary Innovation for Sustainable Engines) program will demonstrate and mature a range of new, disruptive technologies for future engines that could enter service by the mid-2030s.
INTERIM 2021 ACTIVITY REPORT
Key business highlights
1
Safran and GE Aviation also signed an agreement extending their 50/50 partnership in CFM International to 2050, declaring their intent to lead the way for more sustainable aviation in line with the industry's commitment to halve CO2 emissions by 2050.
Civil aftermarket(1)
First-half 2021 civil aftermarket revenue was down 25.5% in USD terms due to:
- lower spare parts sales for the latest generation of CFM56 engines, slightly down compared to second-half 2020 which benefited from year-end sales;
- decrease in high-thrust engine spare parts;
- slight decrease in service contracts activity.
In the second quarter, civil aftermarket revenue rebounded by 55% compared with second-quarter 2020 and by 15% compared with first-quarter 2021.
Helicopter turbines
Safran received FAA type certification for its Arrano 1A engine, installed in the Airbus H160 helicopter. The engine is now certified in both Europe and the United States.
2. Aircraft Equipment, Defense and Aerosystems
Safran has been chosen by Singapore Airlines (SIA) to provide wheels and carbon brakes for its entire fleet of Boeing 777-9 through a tailored brake landing service contract (31 aircraft are currently on order). Safran currently supports wheels and carbon brakes for 126 Airbus and Boeing aircraft at SIA and Scoot, the low-cost airline of the SIA Group, including A320, A350, 737-800 NG, 737-8 MAX and 787.
Safran signed a 12-year NacelleLife™ service contract with Corsair for the nacelles of its five Airbus A330neo. With this contract, the Group commits to providing repair services for the
nacelles and general servicing of the thrust reversers at the time of their programmed removals, with the support of its network of experts for on-site nacelle inspections and its Maintenance, Repair and Overhaul (MRO) centers.
Safran has launched Geonyx M, a new inertial unit for fast boats and amphibious vehicles. It complements the Geonyx land range as well as the Argonyx and Black-Onyx ranges intended respectively for first-rank surface vessels and submarines.
3. Aircraft Interiors
Despite a low point which in all likelihood was reached for Aircraft Interiors revenue in first-half 2021, Safran is regaining customer interest in its products and achieved several commercial successes, in particular with:
- a German airline, to provide the crew rest areas (LDMCR - Lower Deck Mobile Crew Rest) and Skylounge Core business class seats for its future fleet of 16 A330neo aircraft;
- a Middle Eastern airline, to provide new Vue business class seats for its Boeing 737 MAX;
- an Indian airline, to provide linefit Z200 economy class seats for 75 A320/A321.
- Civil aftermarket (expressed in USD): this non-accounting indicator (non-audited) comprises spare parts and MRO (Maintenance, Repair and Overhaul) revenue for all civil aircraft engines for Safran Aircraft Engines and its subsidiaries and reflects the Group's performance in the civil aircraft engines aftermarket.
2021 INTERIM FINANCIAL REPORT SAFRAN I 5
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Safran SA published this content on 04 August 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 August 2021 10:55:13 UTC.