(AOF) – Safran has entered into an agreement with an investment services provider for the implementation of a new tranche of repurchase of its own shares in order to allow, on the one hand, the delivery of shares in the event of conversion of its convertible bonds maturing in 2028 and, on the other hand, for the allocation or sale of shares to employees or corporate officers of Safran or group companies.
Under the terms of this agreement, Safran will purchase ordinary shares for a maximum amount of 450 million euros from January 16, 2024 and no later than March 1, 2024.
This operation will be carried out in accordance with the share buyback authorization given on May 25, 2023 by the general meeting of shareholders which set the maximum buyback price at 175 euros per share.
As a reminder, Safran announced, on July 27, 2023, that the company would repurchase up to approximately 4 million of its own shares (approximately 0.95% of its capital) in order to cover the potential dilution linked to its maturing convertible bonds. in 2028. To this end, Safran has already carried out, between September and November 2023, the repurchase of around 2 million shares.
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Key points
– Third aerospace equipment manufacturer: world number 1 in civil aircraft engines, helicopter flight turbines and controls, power transmissions, aircraft engine nacelles, number 2 in space engines and number 4 in military engines… ;
– Activity of €15.3 billion, organized into 3 divisions: aeronautical and space propulsion (48%), equipment & defense (41%) then Aircraft interiors;
– Business model in 4 pillars: refocusing on civil aviation with the acquisition of Zodiac Aerospace, strengthening of propulsion and equipment, with the 2035 objective of becoming the world’s number 1 aeronautical equipment manufacturer, historic partnership with GM, until 2040 on the CFM56 civil engine, gradually replaced by the Leap engine and ramp-up of services (57% of sales), better margins than original equipment;
– Non-operable capital (11.2% of shares for the State and 6.8% for employees), Ross McInnes chairing the board of directors of 16 members, Olivier Andries being general manager;
– Debt-free balance sheet with free self-financing of €2.7 billion and liquidity of €6.7 billion.
Challenges
– 2025 strategy to increase competitiveness, with annual growth of 10% in turnover and an operating margin between 16 and 18%;
– Innovation strategy supported by R&D of €1.5 billion and financially supported by the French State, with a portfolio of +13,000 patents (540 applications in 2021, 1st patent applicant in France):
– 2 “Safran Tech” R&T centers in Saclay and Gennevilliers: energy and propulsion, materials and processes, sensors, electrical and electronic systems, signal and information processing, modeling & simulation and future turbine blades,
– platforms with specific equipment for new generation materials,
– grouping of additive manufacturing processes in Haillan, with a view to their industrial deployment,
– strategic partnerships – the European “Clean Sky”, Saclay, INSALyon, ASTech, etc.:
– Environmental strategy validated by the SBTi:
– reduction in 2030 of 50.4% compared to 2018, in C02 emissions from production via an energy sobriety plan of 10% less electricity consumption in 2024,
– 42.5% reduction in CO2 emissions from the 400 main suppliers in 2035, disruptive “low carbon” aircraft by 2035, integration of sustainable fuels,
– CFM RISE program to reduce engine emissions by +20%;
– Rotation of the portfolio with 3 disposals and 5 acquisitions – Oralia, 63% of Celas, Aubert Duval-, aeronautical electrical systems activity of Thales and Syrlinks;
-Order book at 4 times annual sales (10,000 LEAP engines), recurrence of turnover through after-sales for propulsion and visibility reinforced by orders from Air India.
Challenges
-2022 accounts marked by depreciation on Russian activities and Aircaft Interiors;
– Continued improvement in air traffic and CFM engine flight cycles;
– Acceleration of the recovery of Aircraft Interiors (revenues at 60% of 2019 levels);
– After a 25% increase in sales, 2023 objectives of a turnover of 23 billion, an operating profit of €3 billion and free self-financing of +€2.5 billion.
– 2022 dividend of €1.35, i.e. a distribution rate of 40%.
The end of a duopoly?
For several decades, the American Boeing and the European Airbus have shared 99% of the world market for airliners with more than 110 seats. This market is worth more than 100 billion dollars per year. However, this duopoly appears weakened in 2022 for several reasons. First, for the first time, two medium-haul single-aisle aircraft, the C919 from China’s Comac and the MC-21 from Russia’s Irkut, are preparing to enter service. Added to this is the Boeing 737 MAX crisis. With the cessation of deliveries of this aircraft between 2019 and 2021, the production balance has been disrupted. In 2021 Boeing posted 340 deliveries, with Airbus remaining well in the lead, with 611.