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Morningstar’s Analysis

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1-Star Price

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5-Star Price

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Economic Moat

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Capital Allocation

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Safran Raises Cash Flow and Delivery Guidance as Service Activity Boosts Group Sales

Joachim Kotze Equity Analyst

Analyst Note

| Joachim Kotze |

Some more positive news from wide-moat Safran as the group further raises guidance for 2021 free cash flow and Leap engine deliveries. Free cash flow is now expected to exceed EUR 1.5 billion, where it was previously expected to be an increase on the EUR 1 billion generated in 2020, and Leap engine deliveries to reach 900 for the full year, up from previous guidance of 800 units. Guidance for a full-year revenue decline in the low single digits and a 1% increase in the EBIT margin to 11% remains unchanged. Third-quarter organic group revenue growth of 11.6% was driven by an increase in group services growth of 27%, in line with the recovery of global flight activity. We remain positive on the group’s long-term fundamentals driven by a young fleet (lower retirement risk) and favorable narrow-body aircraft exposure. We maintain our EUR 142 fair value estimate, which implies decent upside for a high-quality business.

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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.

Contact
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 78,892

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