Safran has announced ambitious goals for 2025 and beyond, projecting a 7% to 9% annual revenue growth from 2024 to 2028, driven by rising air traffic and defense spending. By 2028, operating profit is expected to reach between 6 billion and 6.5 billion euros. The company plans to return 70% of its free cash flow to shareholders, primarily through dividends and share buybacks, while also restructuring its civil engine service revenue categories.
Safran Sets Ambitious Targets for 2025 and Beyond
PARIS (Agefi-Dow Jones) — Renowned aerospace engine manufacturer Safran has unveiled its strategic goals for 2025 and the outlook for 2028, focusing on an upward trajectory for profits, cash flow, and shareholder dividends.
With the anticipated growth in air traffic, defense spending, and enhanced production rates, Safran projects an average revenue increase of 7% to 9% annually from 2024 to 2028. This forecast was revealed ahead of an important investor day, highlighting the company’s confidence in future performance.
Strong Financial Performance and Cash Flow Forecast
By 2028, Safran expects its current operating profit to fall between 6 billion and 6.5 billion euros, which translates to an impressive annual growth rate of 10% to 13% from 2024 onward. Moreover, the company anticipates generating a cumulative free cash flow of 15 billion to 17 billion euros during the 2024-2028 timeframe, reflecting a robust conversion rate of 65% to 70% from current operating profit to free cash flow.
Safran emphasized that this growth will be fueled by several factors, including an increase in EBITDA, better inventory turnover, and adjustments related to Rafale advances and corporate tax payments in France, estimated at approximately half a billion euros over two years. Notably, these projections are based on a constant perimeter, excluding any future acquisitions.
Looking ahead to 2025, Safran expects a revenue increase of about 10% and a current operating profit ranging from 4.7 billion to 4.8 billion euros. The free cash flow for that year is projected to be between 2.8 billion and 3 billion euros, factoring in the anticipated negative impact from the rise in corporate taxes.
The company also highlighted a significant expected rise in Leap engine deliveries, projecting an increase of 15% to 20% compared to 2024. Additionally, revenue from spare parts is expected to grow by 5% to 9% in dollar terms, while services revenue is anticipated to rise by about 15% in dollars.
To better capture the increasing share of service contracts for civil engines, Safran plans to divide its historical civil engine service revenue indicator into two distinct categories: ‘spare parts’ revenue and ‘services’ revenue, effective from 2025.
While the outlook appears promising, Safran identified the production capabilities of its supply chain as a potential risk factor. The company has also reaffirmed its financial goals for 2024, including expected revenues of approximately 27.1 billion euros and a current operating profit around 4.1 billion euros.
In terms of capital allocation, Safran intends to return around 70% of its projected free cash flow to shareholders over the 2024-2028 period. This return will primarily consist of dividends, which will account for 40% of net income, alongside a share buyback initiative totaling 5 billion euros planned between 2025 and 2028.
As for mergers and acquisitions, Safran is committed to a targeted strategy focused on opportunities that align with its business objectives while maintaining rigorous financial discipline to enhance its portfolio.