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Safran SA - Stock Quote SAF

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Morningstar's Safran SA Stock Analysis

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Safran Believes It Can Offset Inflationary Cost Pressures; Shares Undervalued

Joachim Kotze, CFA Equity Analyst

Analyst Note

| Joachim Kotze, CFA |

The key theme from wide-moat Safran’s first-quarter 2022 sales update remains inflation and supply chain disruptions, exacerbated by the Russia-Ukraine conflict. The group suspended operations in Russia, which will have a 2% impact on sales and an estimated 70-basis-point margin headwind. Additionally, raw material and energy cost inflation will have an 80-basis-point impact on group margins. Management believes further cost savings will be sufficient to offset the 150-basis-point impact and maintains previous full-year 2022 margin guidance of 13%. Safran, which sources 50% of its titanium from Russia, has secured supplies for 2022 and is looking at alternative suppliers in future. Shifting supply chains for certified cast parts is complicated and we believe the inflationary effects could last beyond the current year. We make no changes to our EUR 150 fair value estimate and shares remain attractive for this wide-moat company.

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Safran SA's Company Profile

Business Description

Safran is a key player in the global commercial and military aerospace propulsion and equipment sectors. The group has three reportable segments: aerospace propulsion (commercial and military aircraft engines and spare parts); aircraft equipment, defense, and aerosystems (diversified business supplying components ranging from landing gear to avionics); and aircraft interiors (seats, cabins, and in-flight entertainment systems). Safran is a partner to the CFM joint venture with GE Aviation, which produces narrow-body engines.

2, boulevard du General-Martial-Valin
Paris, 75015, France
T +33 140608080
Sector Industrials
Industry Aerospace & Defense
Most Recent Earnings
Fiscal Year End Dec 31, 2021
Stock Type
Employees 76,765

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