France's Safran unveiled a 23 percent rise in first-half operating income boosted by currency gains and acquisitions and reaffirmed its forecasts for the year as aerospace continues to grow faster than the rest of the economy.
Revenues at the maker of jet engines, infra-red army goggles and airport scanning equipment rose 14 percent to EUR€6.4 billion, representing 5.2 percent growth on a like-for-like basis.
Profits benefited from record aircraft production as Airbus and Boeing tap into transport growth in emerging markets and demand from Western airlines for greater fuel savings, but the second quarter also saw a slowdown in sales of engine parts.
Recurring operating profit grew to EUR€681 million or EUR€662 million after one-off items.
In a key indicator, Safran reported low double-digit growth in spares revenue for CFM jet engines that power the bulk of the world's short- or medium-haul airliner fleet, co-produced with General Electric.
The figure is under the spotlight after US rival United Technologies halved its forecast for 2012 growth in commercial spares at engine unit Pratt & Whitney to 5 percent.
Safran said total civil aftermarket revenues rose 8.1 percent in the first half, in line with a full-year forecast of high single-digit growth. This included a "flattish" performance in larger engines after 3 years of strong growth.
In the first quarter, the civil aftermarket had risen 15.1 percent driven by 24.2 percent growth in CFM spares revenue. The company has stopped reporting CFM spares revenue separately.
Although traffic is increasing and aircraft and engine production are running at record levels, some airlines are limiting spending on spares to save cash, affecting an area in which engine makers make their strongest margins.
Safran chief executive Jean-Paul Herteman said the large installed base worldwide of CFM jet engines would nonetheless provide "several years of expansion" in aftermarket services.
Safran reaffirmed its growth forecasts for the full year including revenues slightly above 10 percent and recurring operating income of around 20 percent.
CFM and Pratt & Whitney compete to provide engines on Airbus medium-haul A320-family jets, while CFM is the sole engine supplier for the Boeing 737.
