PR Newswire/Les Echos/
Safran reports 9.5% revenue growth in first-quarter 2013
driven by strong civil aviation business
Full-year 2013 revenue outlook upgraded
All revenue figures in this press release represent adjusted revenue. Please
refer to definitions contained in the Notes on page 6 of this press release.
KEY FIGURES FOR THE FIRST QUARTER OF 2013
- First-quarter 2013 adjusted revenue was Euro 3,404 million, up 9.5%
year-on-year, or up 9.6% on an organic basis.
- Solid revenue growth contribution from Aerospace activities, both in OE
deliveries and aftermarket. Sales in Defence were resilient. Positive
dynamics in Security.
- Civil aftermarket up 10.0% in USD terms, driven by first overhaul of
recent CFM56 and resumption of growth in widebody engines.
- Full-year 2013 revenue outlook is upgraded further to first quarter revenue
dynamics and the integration of Goodrich Electrical Power Systems (GEPS) from
April 1, 2013: Safran expects adjusted revenue to increase by a percentage in
the mid-to-high single digits (previously 5%). Adjusted recurring operating
income should grow by a percentage in the mid-teens. Free cash flow is
expected to represent about 40% of adjusted recurring operating income.
KEY BUSINESS HIGHLIGHTS FOR THE FIRST QUARTER OF 2013
- The Narita International Airport Corporation of Japan purchased an additional
13 high-speed CTX-9800 explosives detection systems for hold baggage
screening. Morpho's systems are the most widely deployed in the world, with
nearly 2,000 in service.
- CFM: AviancaTaca (Colombia) selected LEAP engines to power 33 A320neo
aircraft, in addition to CFM56 engines for 18 A320ceo and signed a 15-year
RPFH agreement. Ryanair committed to purchase 175 single source
CFM56-powered Boeing 737-800. China Aircraft Leasing Company (CALC) selected
CFM56 engines for 25 A320ceo.
- Turbomeca unveiled "Arrano", the brand new 1,100 shp engine designed to power
4-to-6 ton helicopters. In July 2012, Eurocopter announced that its
new-generation X4 helicopter will be the first platform to be powered by the
Arrano engine. Turbomeca also introduced the Arrius 2B2 Plus engine variant
for Eurocopter EC135T3 helicopter.
- Safran completed the acquisition of Goodrich Electrical Power Systems (GEPS)
for Euro 300 million, creating a world leader in on-board electrical power
- Safran reduced its stake in Ingenico by placing in the market 12.57% of
Ingenico's share capital for proceeds of Euro 287 million. The resulting
after-tax profit for Safran is Euro 131 million was recorded in the first
quarter 2013 accounts. Safran will remain a significant shareholder,
retaining 10.2% of Ingenico's share capital and 16.6% of voting rights.
Paris, April 23, 2013 - Safran (NYSE Euronext Paris: SAF) today reported its
revenue for the first quarter of 2013.
Chairman and CEO Jean-Paul Herteman commented:
" Safran recorded solid revenue growth in the first quarter, notably in
aerospace with continued and robust OE production growth and solid aftermarket
momentum. Since the beginning of the year, our global civil aftermarket
performed satisfactorily with 10% growth over an already strong first quarter
Based on growth in the first-quarter of 9.5% and the contribution of the
newly-acquired Goodrich business, we upgrade our full-year revenue guidance
for 2013 and confirm our renewed high confidence in our outlook for 2014 and
FIRST-QUARTER 2013 REVENUE
Solid growth in revenue. For first-quarter 2013, Safran's revenue was Euro
3,404 million, compared to Euro 3,108 million in the same period a year ago, a
9.5% year-on-year increase (9.6% organic growth).
First-quarter 2013 revenue increased by Euro 296 million on a reported basis.
On an organic basis, revenue increased by Euro 298 million as a result of good
momentum in Aerospace, both on OE volumes and aftermarket activity.
Organic revenue was determined by applying constant exchange rates and by
including the revenue in 2013 of acquired activities only for the comparable
periods to the period in 2012 for which they are included in 2012 reported
revenue. Hence, the following calculations were applied:
Reported growth 9.5%
Impact of acquisitions & newly consolidated activities
Euro 1 million n.s.
Currency impact Euro (3) million n.s.
Organic growth 9.6%
The slight unfavourable currency impact on revenue of Euro (3) million for
first-quarter 2013 reflected a negative translation effect on revenue notably
generated in USD, GBP and BRL , mitigated by a positive transaction impact in
USD with a significant improvement in the Group's hedged rate (USD 1.29 to the
Euro vs. USD 1.32 in the year-ago period).
The full-year 2013 revenue outlook is upgraded further to first-quarter revenue
dynamics and the integration of Goodrich Electrical Power Systems business from
April 1, 2013.
* Revenue to increase by a percentage in the mid-to-high single digits
(previously 5%) at an estimated average rate of USD 1.29 to the Euro.
* Adjusted recurring operating income to increase by a percentage in the
mid-teens at a hedged rate of USD 1.29 to the Euro.
* Free cash flow to represent about 40% of adjusted recurring operating income
taking into account the expected increase in capex and R&D to cope with
rising production rates and new business opportunities.
The underlying assumptions for full-year 2013 outlook are unchanged:
* Healthy increase in aerospace OE deliveries
* Civil aftermarket increase in the high single digits
* Incremental R&D cash effort of around Euro 200 million (vs. 2012)
* Increase in tangible capex of around Euro 200 million (vs. 2012)
* Continued margin improvement in Equipment
* Stable profitability in Defence
* Profitable growth for the Security business
* Continued benefits from the on-going Safran+ plan to enhance the cost
structure and reduce overhead.
The Group has finalised its hedging for 2013 to 2014. Hedging for 2015 is
almost completed with USD 4.4 billion achieved at USD 1.25 to rise to USD 4.8
billion at USD 1.25 as long as EUR/$<1.40 up to end 2013. Hedging for 2016 has
been increased to USD 1.7 billion at USD 1.25 to rise to USD 4.1 billion at
USD 1.25 as long as EUR/$<1.39 up to end 2014. At April 15, 2013, the firm
hedge book amounted to USD 15.2 billion.
Hedged rates are unchanged at:
* 2013: USD 1.29 to the Euro
* 2014: USD 1.28 to the Euro
* 2015: targeted hedged rate at USD 1.26 to the Euro
* 2016: targeted hedged rate at or below USD 1.26 to the Euro
On March 27, 2013 the French State finalised the sale of 13 million shares in
Safran, representing 3.12% of the Group's capital, via accelerated
book-building reserved for qualified investors. Consequently, its holding in
the Group fell from 30.2% to 27.08% (26.3% of voting rights).
Article 11 of the 1986 privatization law provides that in the event of the sale
on the stock market of stakes in listed companies, shares must be offered to
employees and former employees. Therefore, 1,444,444 shares will be offered by
the French State to employees of Safran in the near term.
* Aerospace Propulsion
First-quarter 2013 revenue grew by 15.5% to Euro 1,831 million (15.3% on an
organic basis) compared to revenue in the year-ago period of Euro 1,585
million. The increase in revenue was primarily driven by strong growth in
civil original equipment and spares, both for CFM56 and high-thrust engines.
The strength of helicopter engine deliveries activity also contributed to
revenue growth. Military revenue (original equipment and spares) was strongly
up compared to an unusually soft first-quarter 2012 for the Rafale engine
activity, and now benefitting from initial A400M engine deliveries. Space &
missile propulsion revenue was flattish in the first-quarter.
OEM CFM56 engine deliveries at 390 units were up by 3% compared to the same
period a year ago. In the first quarter, total commitments and firm orders for
CFM56 and LEAP amounted to 473 engines. The global backlog for these engines
stands at about 7 years of production at current rates and notably contains
orders and commitments for more than 4,500 next-generation LEAP engines.
In the first-quarter 2013, civil aftermarket revenue grew by 10.0% in USD
terms, driven by first overhauls of recent CFM56 and GE90 engines. Individual
quarters can include significant variation induced by comparison basis and
variability in airline behaviour. Overall service revenue in Aerospace
Propulsion grew by 11.3% in Euro terms and represents a 48.0% share of
revenue. Military engines aftermarket reported a 2-digit revenue growth
compared to a soft comparison base.
* Aircraft Equipment
The Aircraft Equipment activity reported first-quarter 2013 revenue of
Euro 924 million, up 4.6% (4.8% on an organic basis), compared to
Euro 883 million in the year-ago period.
The increase in revenue was primarily attributable to the landing gear
business, with higher deliveries notably on Boeing 787, A330 and A320 programs
coupled with a growing MRO activity. The nacelle business recorded a soft
revenue increase. Indeed, the increase in service contracts and OE deliveries
on A330 thrust reversers was partly mitigated by lower A380 nacelles
deliveries in the first-quarter 2013 (28 units compared to 32 nacelles in the
year-ago period), as well as lower deliveries of small nacelles for business
and regional jets. The electrical harnessing activity saw a good performance
driven by a production ramp up in its product lines, notably the Boeing 787
and A350 programs.
In the first-quarter 2013, overall service revenue in Aircraft Equipment grew
by 7.0% driven by higher aftermarket activities, notably in nacelles and
auxiliary power transmission, and its share of Aircraft Equipment revenue
slightly grew to 28.0% of total sales.
First-quarter 2013 revenue was broadly flat at Euro 304 million (down 1.0%
compared to Euro 307 million in the previous year or down 0.7% on an organic
basis). The resilient performance was mainly driven by solid revenue growth in
the avionics activity, notably in Flight Control Systems and guidance
activities. This trend was partially offset by softer revenue in Optronics
given the tough year-over-year comparison base for the long-range infra-red
goggles on export markets, notably as a consequence of U.S. military budget
contraction. Safran Electronics benefitted from the increasing activity of its
digital engine control system (FADEC) for the LEAP engine.
The Security activity reported first-quarter 2013 revenue of Euro 344 million,
up 3.6% compared to the year-ago period. On an organic basis, it was up 4.8%
driven by renewed momentum in biometric identity solutions with additional
billings in countries such as Egypt and Kenya which suffered from some delays
in the latter part of 2012. The activity also benefitted from the initial
sales of biometric terminals in India. MorphoTrust had a strong quarter driven
by the sale of consumables. e-Documents saw a temporary decline in sales
compared to a strong quarter last year, due notably to a change in legislation
in the Indian telecom market and a slowdown of the banking Brazilian market
which completed its full EMV Eurocard, Mastercard, Visa) migration in 2012.
Detection recorded significant new orders in the quarter that should lead to
some acceleration in revenue during the year, starting from a flattish first
quarter 2013 due to low Trace volumes and unfavourable mix on Explosive
Safran today announced the signing of a definitive agreement for the purchase
of the Rolls-Royce share of their RTM322 helicopter engine programme. A
separate press release was published with more details on the transaction.
Annual Shareholders Meeting May 28, 2013
Capital Market Day (CMD'13) June 16, 2013
H1 2013 results July 26, 2013
Q3 2013 revenue October 24, 2013
* * * * *
Safran will host today a conference call open to analysts and investors at 8:30
am CET which can be accessed at +33 1 70 77 09 35 from France, +44 203 367 9453
from the UK. A replay will be available at +33 1 72 00 15 00, +44 203 367 9460
and +1 877 642 3018 (access code 281111#).
The press release and presentation are available on the website at
* * * * *
Segment breakdown of adjusted revenue
(In Euro million) First First % change % change
quarter 2012 quarter 2013 reported Organic
Aerospace Propulsion 1,585 1,831 15.5% 15.3%
Aircraft Equipment 883 924 4.6% 4.8%
Defence 307 304 (1.0)% (0.7)%
Security 332 344 3.6% 4.8%
Others 1 1 - -
Total Group 3,108 3,404 9.5% 9.6%
2012 adjusted revenue by quarter
(In Euro million) First First Third Fourth Full year
quarter 2012 quarter 2012 quarter 2012 quarter 2012 2012
Propulsion 1,585 1,681 1,635 2,104 7,005
Aircraft Equipment 883 904 850 1,054 3,691
Defence 307 333 276 399 1,315
Security 332 387 371 456 1,546
Others 1 0 2 0 3
Total revenue 3,108 3,305 3,134 4,013 13,560
Euro/USD rate First quarter 2012 First quarter 2013
Average spot rate 1.31 1.32
Spot rate (end of period) 1.34 1.28
Hedged rate 1.32 1.29
 Adjusted data
To reflect the Group's actual economic performance and enable it to be
monitored and benchmarked against competitors, Safran prepares an adjusted
income statement alongside its consolidated financial statements.
Particularly, Safran recognizes, all changes in the fair value of its foreign
currency derivatives in "financial income (loss)", in accordance with the
provisions of IAS 39 applicable to transactions not qualifying for hedge
Accordingly, Safran's consolidated income statement is adjusted for the impact
in financial income (loss) of the mark-to-market of foreign currency
derivatives, in order to better reflect the economic substance of the Group's
overall foreign currency risk hedging strategy:
- revenue net of purchases denominated in foreign currencies is measured using
the effective hedging rate, i.e., including the costs of the hedging
- the recognition of the mark-to market of unsettled hedging instruments at the
closing date is neutralized.
First-quarter 2013 reconciliation between consolidated revenue and adjusted
Currency hedging Business combinations
Q1 2013 Consolidated Remeasureme Deferred Amortization
revenue nt of revenue hedging gain intangible
(loss) assets - PPA impacts -
Sagem- other business
(In Euro million) merger
Revenue 3,378 26 - n/a n/a
 Civil aftermarket (expressed in USD)
This non-accounting indicator (non-audited) comprises spares and MRO
(Maintenance, Repair & Overhaul) revenue for all civil aircraft engines for
Snecma and its subsidiaries and reflects the Group's performance in civil
aircraft engines aftermarket compared to the market.
* * * * *
Safran is a leading international high-technology group with three core
businesses: Aerospace (propulsion and equipment), Defence and Security.
Operating worldwide, the Group has 62,500 employees and generated sales of 13.6
billion euros in 2012. Working alone or in partnership, Safran holds world or
European leadership positions in its core markets. The Group invests heavily in
Research & Development to meet the requirements of changing markets, including
expenditures of 1.6 billion Euros in 2012. Safran is listed on NYSE Euronext
Paris and is part of the CAC40 index.
For more information, www.safran-group.com / Follow @SAFRAN on Twitter
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-0- Apr/23/2013 08:17 GMT
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