Safran Boosts Operating Income Forecast on Strong First Half

Safran SA, Europe’s second-largest aircraft engine maker, raised its 2014 earnings forecast after demand for spare parts drove a 17 percent jump in first-half operating profit.

Adjusted recurring operating income will rise by a percentage “approaching the mid-teens,”Safran said today in a statement. That compares with a previous prediction of a “low-double digit” percentage increase in earnings. The company reiterated that revenue will jump by a percentage rate in the “mid-to-single digits.”

The earnings improvement, with adjusted recurring operating income reaching 981 million euros ($1.31 billion), was driven by aerospace activities in propulsion and by equipment. Safran has a partnership with General Electric Co. called CFM International for engines on Airbus Group NV and Boeing Co. single-aisle planes and also works with GE on engines for Boeing’s 777 and the planned 777X.

“The excellent commercial activity, topped off by the Farnborough air show, continued to provide comfort in the demand for our technologies,” said Chief Executive Officer Jean-Paul Herteman, referring to the aviation trade show earlier this month.

Stock Gain

Safran rose as much as 1.39 euros, or 3.1 percent, to 46.28 euros in Paris, and traded at 45.81 euros as of 9:36 a.m. The stock has lost about 9 percent so far this year.

In Safran’s equipment business, a 9.9 percent revenue jump to 2.13 billion was attributable mainly to higher deliveries of landing gear and wiring for new Boeing Co. 787 jets as well as for nacelles for Airbus as well as for regional jets.

The Paris-based company also benefited from sales of spare engines and parts for airliners already flying.

At the Farnborough Air Show, Safran’s CFM International joint venture won orders for 1,062 engines in addition to service agreements at a combined value of $21.4 billion.

Rolls-Royce Holdings Plc, Europe’s largest maker of aircraft engines, reported a 20 percent drop in first-half profit amid increased development spending and restructuring costs related to severance payments. The company said growth will resume only in 2015.

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