The revenues of the engine manufacturer and aeronautical equipment manufacturer amounted to 19.04 billion euros. Florence Piot / stock.adobe.com
Revenues from the engine and aeronautical equipment manufacturer were driven by the recovery in global air traffic, especially on medium-haul.
Safran’s sales jumped by a quarter in 2022, driven by the appreciation of the dollar, the currency in which it invoices its services for civil engines, which are growing strongly and which constitute the group’s main source of income. Revenues from the engine manufacturer and aeronautical equipment manufacturer stood at 19.04 billion euros, according to its results published on Friday which show a “Foreign exchange effect of 1.382 billion euros reflecting a positive effect of revenue in dollars“. At constant scope and exchange rates, revenue growth was 15.8%.
Revenues were driven by the recovery in global air traffic, especially on medium-haul: as aircraft fly more, airlines need more spare parts and maintenance operations. These services for civil engines grew by 29.3% and alone account for almost a third of Safran’s revenue. And since they are billed in dollars and the American currency has appreciated strongly, they benefit from a favorable exchange rate effect for the group.
Deliveries of Leap engines, which power all Boeing 737 MAXs and around 60% of Airbus A320s, reached 1,136 units, up by a third. The engine manufacturer was initially counting on 1,200 engines but it had to face, like the aircraft manufacturers, the difficulties encountered by its chain of suppliers, weakened during the pandemic, to increase the pace. He expects for 2023 an increase in “about 50%“of the number of Leap delivered, or about 1,700 engines, when he counted last year to deliver 2,000 in 2023. “The main risk factor remains the production capacities of the supply chain“, he warns.
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For 2023, the group expects “at least 23 billion euros” in revenue
In total, the Propulsion division’s revenues increased by 18.3%, as did those of the Equipment and Defense business (+10.6%) and Aircraft Interiors-cabins, seats and inflight entertainment ( +25.1%). This enabled the group to generate an adjusted net profit of 1.18 billion euros. In published data, however, Safran suffered a net loss of 2.46 billion euros due to a charge of 4.5 billion euros related to the need to write down the value of its foreign exchange derivatives portfolio in its accounts. .
Like all groups, Safran hedges foreign exchange risks by buying currencies for future years at rates agreed in advance. These foreign exchange hedging contracts were made at a rate that had become too expensive in relation to the fall in the euro during the half-year against the dollar.
“This is a purely accounting entry, with no impact on cash, since the hedges are intended to be exercised with future cash receipts in dollars.», explained Safran in the first half of the year. For 2023, the group is counting on “at least 23 billion eurosin revenue and a one-third increase in its current operating profit toaround 3 billion euros“.
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