Civil aftermarket up 24% versus Q2 2021 and 44% year-on-year
Latest air traffic trends support a further improvement in the 4th quarter
FY 2021 outlook confirmed for sales and profitability. Free cash flow target raised further thanks to additional advance payments
Adjusted data
Q3 revenue at
9M revenue at
Consolidated data
Revenue was
Revenue was
All figures in this press release represent adjusted[1] data, except where noted. Please refer to the definitions and reconciliation between 9M 2021 consolidated income statement and adjusted income statement. Please refer to the definitions contained in the Notes on page 8 of this press statement.
Organic variations exclude changes in scope and currency impacts for the period.
Executive commentary
CEO
'Safran's third-quarter revenue confirms that the recovery is gaining strength month after month, which makes us optimistic for the future. We are efficiently managing the business recovery in terms of costs, supply chain and inventories which will enable Safran to emerge stronger from this crisis. We are therefore very confident about our revenue and profitability outlook for 2021, and even more positive about the free cash flow target, which is much better than anticipated. All teams are currently working on the Capital Markets Day and look forward to sharing Safran's exciting outlook.'
Air traffic data in Q3 2021
Air traffic recovered during the third quarter of the year driven by an improvement of the sanitary situation in several countries. The summer season has been strong in
Narrowbody ASK1 in Q3
After a slow start to the year, narrowbody ASK were at 59.4% of their 2019 levels in June, reaching 71.4% in September versus 2019. As of
Weekly CFM engines flight cycles
As of
CFM56 fleet : down (31)% slightly improving from (35)% at
LEAP fleet : up 105% improving from 101% at
1 Available Seat Kilometers
Key business highlights
1 - Aerospace Propulsion
Narrowbody engine deliveries
At the end of
LEAP
CFM56
CFM56 engines deliveries reached 79 units in the first nine months of 2021, of which 30 in the third quarter. Last year, 123 engines were delivered during the same period, of which 39 in Q3 2020.
At the 13th
Helicopter turbines
On
2 - Aircraft Equipment, Defense and Aerosystems
Safran has been selected by the Canadian ultra-low-cost carrier
3 - Aircraft Interiors
Despite a challenging environment, commercial activity remained dynamic throughout the quarter:
A US airline selected Safran's Business Class seats to equip 200 single-aisle aircraft.
An Asian airline chose
Revenue for the third quarter and first nine month 2021
Q3 2021 revenue amounted to
9M 2021 revenue amounted to
Aerospace Propulsion
In the third quarter of 2021 revenue was
OE revenue increased by 1.0% compared with Q3 2020, due to higher LEAP and M88 engine deliveries partially compensated by lower CFM56 and high-thrust engines.
LEAP engine deliveries increased by 31% compared to Q3 2020. As planned, CFM56 engine deliveries were down by (23)%.
High-thrust engine volumes were down by (34)% during the third quarter 2021. M88 engine deliveries were up and amounted to 15 units in Q3 2021 compared with 6 in Q3 2020 mainly driven by export contracts (
Helicopter turbine OE sales decreased during Q3 2021 (coming from all engine families).
Services revenue strongly increased by 27.8% and represented 62.4% of sales. Civil aftermarket2 revenue continued its recovery during the third quarter 2021, increasing by 43.8% (in USD) versus Q3 2020 and by 24% compared to Q2 2021. This growth was mainly due to higher spare parts sales for the latest generation of CFM56 engines and to a lesser extent thanks to service contracts for CFM56 and high-thrust engines spare parts sales. More broadly, services growth also comes from M88 spare parts sales and per hour contracts for helicopter turbines support activities.
In the first nine months of 2021 revenue was
2 Civil aftermarket (expressed in USD): this non-accounting indicator (non-audited) comprises spare parts and MRO (Maintenance, Repair & Overhaul) revenue for all civil aircraft engines for
OE revenue was down by (10.5)% compared to the first 9 months of 2020, due to lower CFM56 and high-thrust engine deliveries.
Combined shipments of CFM56 and LEAP engine deliveries decreased compared to 9M 2020 from 745 to 704 units. High-thrust engines were down by (31)% during the first nine months of 2021. M88 engine deliveries were up and amounted to 46 units in 9M 2021 compared with 25 in 9M 2020 notably thanks to export contracts.
Helicopter turbine deliveries lowered by (10)% to 394 units in 9M 2021 from 436 in 9M 2020.
Services revenue decreased by (9.2)% and represented 60.9% of sales. Civil aftermarket revenue for the first nine months of 2021 was down (7.7)% in USD terms including a decrease of (53.4)% in Q1 2021 (vs. Q1 2020) and an increase in Q2 and Q3 2021 of respectively 55.0% (vs. Q2 2020) and 43.8% (vs. Q3 2020). The decrease year to date is due to lower spare parts sales for the latest generation of CFM56 engines and to a lesser extent to lower spare parts sales for high-thrust engines (notably CF6-80) in Q1. Service contracts were almost flat compared to the year ago period. During the first nine months of the year, military engine services were impacted by lower spare parts sales.
Helicopter turbine support activities (per hour contracts as well as time & material) have increased since the beginning of the year.
Aircraft Equipment, Defense and Aerosystems
In the third quarter of 2021 revenue was
OE revenue slightly decreased by (3.5)% in Q3 2021 mainly driven by lower volumes for landing gear, wiring and power distribution activities (mainly
Services revenue increased by 25.0% in Q3 2021 thanks to all activities (mainly carbon brakes and nacelles support activities).
In the first nine months of 2021 revenue was
OE revenue decreased by (15.3)% in the first nine months of 2021 mainly driven by wiring and power distribution activities, landing gear for
Services revenue were slightly down (3.6)% in the first nine months of 2021 mainly due to carbon brakes, landing gear MRO and nacelles support activities and despite a positive contribution from Electronics & Defense activities. Aerosystems activities were flat in 9M 2021 compared to 9M 2020.
Aircraft Interiors
In the third quarter of 2021 revenue was
OE revenue slightly decreased by (1.4)% (also (1.4)% organically) in Q3 2021 due to Cabin activities (mainly galleys and lavatories for A320 and A350 programs). Seats had a small positive impact on division sales thanks to business programs (mainly Polaris). Strong growth for IFE products as deliveries to airlines resumed this quarter.
Services revenue strongly increased (39.5% or 54.3% organically) in Q3 2021, mainly thanks to Cabin spare sales and MRO activities.
In the first nine months of 2021 revenue was
OE revenue dropped by (27.9)% in the first nine months of 2021. Seats was impacted by a strong decrease on all programs and Cabin activities by lower volumes for galleys and lavatories (A320 and A350 programs) and floor to floor activity (
Services revenue decreased by (27.8)% in the first nine months of 2021, mainly due to Seats aftermarket as well as Cabin spare sales and MRO activities.
Currency hedges
The hedge book amounted
2021 is hedged at a targeted hedge rate of
2022 is hedged at a targeted hedge rate from
2023 is hedged at a targeted hedge rate from
2024 is partially hedged at a targeted hedge rate from
Full-year 2021 outlook confirmed for sales and profitability, further raised for free cash flow.
Safran reaffirms its FY 2021 outlook (compared with FY 2020 figures):
Adjusted revenue to decrease in the low single digits in organic terms. At an estimated spot rate of
Adjusted recurring operating margin to increase above 100 bps, at least a 300 bps improvement versus H2 2020 (based on a hedge rate of
Safran is further improving its free cash flow guidance:
Free cash flow generation above
As a reminder, the full-year 2021 outlook is based on a number of assumptions, notably on civil aftermarket which relies on further fourth quarter improvement and LEAP deliveries which are expected to be around 900 (previously '800+').
Agenda
Capital Markets Day 2021 :
FY 2021 earnings :
Q1 2022 revenue :
Annual General Meeting :
Safran will host today a conference call open to analysts, investors and media at
Please ask for the 'Safran' conference and state your name. We advise you to dial in 10 minutes before the start of the conference.
A replay of the conference call will be available until
The press release and presentation are available on the website at www.safran-group.com (Finance section).
Key figures
Notes
[1] Adjusted revenue
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.
Safran's consolidated income statement has been adjusted for the impact of:
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.
Third-quarter 2021 and 9M 2021 reconciliation between consolidated revenue and adjusted revenue:
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 disease.
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 Us
Press relations
Safran
+33140608028
catherine.malek@safrangroup.com
Add to my contacts
Investor Relations
Cecilia Matissart
Safran
+33140608246
cecilia.matissart@safrangroup.com
Add to my contacts
Investor Relations
Florent Defretin
Safran
+33140602730
florent.defretin@safrangroup.com
Add to my contacts
Investor Relations
Safran
+33140608219
aurelie.lefebvre@safrangroup.com
Add to my contacts
Investor Relations
Safran
+33140602726
jean-baptiste.minato@safrangroup.com
Add to my contacts
(C) 2021 Electronic News Publishing, source