Safran H1 Profit Up On Strong Aftermarket

Safran on Thursday reported a 22.5 percent rise in first-half operating income, buoyed by civil jet engine overhauls.

Safran's first-half net profit grew sharply to EUR€1.16 billion from EUR€616 million, helped by a gain from selling its main block of shares in Ingenico.

With the help of a strong dollar, Safran posted a 16.6 percent rise in first-half revenue to EUR€8.40 billion (USD$9.2 billion). On a comparable basis, revenue grew 5 percent.

First-half adjusted recurring operating income was EUR€1.17 billion.

Safran said it expects 2015 operating income to rise by a percentage in the mid-teens instead of the low double-digits. Its main revenue and cashflow targets were left unchanged.

Together with General Electric, Safran co-owns jet engine maker CFM International.

Safran's closely watched civil aftermarket revenue rose 27.8 percent in dollar terms in the first half as recent versions of CFM56 and GE90 engines started coming in for overhaul.

"The (aftermarket) trend we have seen since the beginning of the year should be maintained throughout 2015," chief executive Philippe Petitcolin told reporters, noting however that the year-on-year comparison would be tougher in the second half.

Safran revised up its 2015 target for growth in such revenue to a percentage in the high teens from around 10 percent.

PRODUCTION TARGETS

Petitcolin, presenting his first results since becoming CEO in April, said Safran was ready to meet ambitious production targets. However he reiterated the group was not prepared to go beyond what it had already promised to Airbus and Boeing.

After a boom in plane orders, CFM has sold 9,580 of its new LEAP engines and faces a steep climb in production after they enter service with Airbus in 2016, followed by Boeing in 2017.

Safran and GE last month warned Airbus and Boeing against lifting production too quickly, saying they would need time to study the risks of going beyond current goals that are equivalent to 50 to 52 single-aisle jets a month per plane maker.