Q3 2021 sales: good sequential improvement leading to confirmation of full year guidance – Marketscreener.com
Paris, October 29, 2021
CEO Olivier Andriès commented:
“Safran’s third-quarter revenue confirms that the recovery is gaining strength month after month, which makes us optimistic for the future. We are efficiently managing the business recovery in terms of costs, supply chain and inventories which will enable Safran to emerge stronger from this crisis. We are therefore very confident about our revenue and profitability outlook for 2021, and even more positive about the free cash flow target, which is much better than anticipated. All teams are currently working on the Capital Markets Day and look forward to sharing Safran’s exciting outlook.”
Air traffic data in Q3 2021
Air traffic recovered during the third quarter of the year driven by an improvement of the sanitary situation in several countries. The summer season has been strong in Europe as well as in the United States. Trafic in Asia was mixed during the quarter, with strong volatility in China and still a difficult situation in Asia Pacific. Thanks to the vaccine rollout across the world, border reopenings supported the traffic rebound throughout Q3 but, nevertheless, at a different pace depending on the region.
1 Available Seat Kilometers
Key business highlights
1 – Aerospace Propulsion
Narrowbody engine deliveries
At the end of September 2021, combined shipments of CFM56 and LEAP engines reached 704 units, compared with 745 in the year ago period.
At the 13th China International Aviation and Aerospace Exhibition, Air China chose LEAP-1A engines for its 30 A320neo aircraft, which are gradually entering into service this year. In addition, Air China and CFM also signed a letter of intent to strengthen the LEAP engines maintenance, repair and overhaul (MRO) capacity of Sichuan Services Aero-engine Maintenance (SSAMC), a joint venture between the two companies.
On September 8, 2021, Safran completed successfully a helicopter engine test campaign using 100% sustainable aviation fuel (SAF). During this campaign, a Makila 2 ran on biofuel produced by TotalEnergies from residue and waste from the circular economy, in particular used cooking oil.
2 – Aircraft Equipment, Defense and Aerosystems
Safran has been selected by the Canadian ultra-low-cost carrier Flair Airlines to equip its 737NG and 737MAX aircraft fleet with wheels and brakes. This award reinforces Safran’s worldwide leading position on the 737NG and 737MAX wheels and carbon brakes market, with almost 3,500 airplanes equipped by or committed to Safran, at over 100 operators.
3 – Aircraft Interiors
Despite a challenging environment, commercial activity remained dynamic throughout the quarter:
Revenue for the third quarter and first nine month 2021
Q3 2021 revenue amounted to Euro 3,734 million, an increase of 10.4%, or Euro 352 million, compared to the year ago period. Changes in scope had a net impact of Euro (9) million further to the disposal of a non-core activity in Aircraft Interiors. The net impact of currency variations was Euro (30) million, reflecting a negative translation effect on non-Euro revenues, notably USD. The average EUR/USD spot rate was 1.18 to the Euro in Q3 2021, compared to 1.17 in the year-ago period. The Group’s hedge rate was unchanged at USD 1.16 to the Euro in Q3 2021. Q3 2021 revenue improved by 4.5% on an organic basis compared to Q2 2021, coming from all divisions.
9M 2021 revenue amounted to Euro 10,610 million, a decrease of (12.7)%, or Euro (1,539) million, compared to the year ago period. Changes in scope had a net impact of Euro (13) million. The net impact of currency variations was Euro (396) million, reflecting a negative translation effect on non-Euro revenues, notably USD. The average EUR/USD spot rate was 1.20 to the Euro in 9M 2021, compared to 1.12 in the year-ago period. The Group’s hedge rate was unchanged at USD 1.16 to the Euro in 9M 2021. On an organic basis, revenue decreased by (9.3)% with sequentially a (34.6)% drop in Q1 2021 (vs. Q1 2020), a 10.0% growth in Q2 2021 (vs. Q2 2020) and a 11.6% growth in Q3 2021 (vs. Q3 2020).
In the third quarter of 2021 revenue was Euro 1,812 million, up 16.2% (17.4% organic) compared to Euro 1,559 million in Q3 2020. Q3 2021 revenue showed a 6.1% organic improvement compared to Q2 2021.
In the first nine months of 2021 revenue was Euro 5,061 million, down (9.7)% (or (6.5)% organic) compared to Euro 5,606 million in the same period of 2020.
2 Civil aftermarket (expressed in USD): this non-accounting indicator (non-audited) comprises spare parts and MRO (Maintenance, Repair & Overhaul) revenue for all civil aircraft engines for Safran Aircraft Engines and its subsidiaries and reflects the Group’s performance in civil aircraft engines aftermarket.
In the third quarter of 2021 revenue was Euro 1,535 million, up 5.1% (5.6% organic) compared with Euro 1,461 million in the year ago period. Q3 2021 revenue was flat (0.5% on organic) compared to Q2 2021.
In the first nine months of 2021 revenue was Euro 4,507 million, down (11.6)% (or (8.3)% organic) compared with Euro 5,099 million in the year ago period.
In the third quarter of 2021 revenue was Euro 385 million, up 7.8% (11.2% organic) compared to Euro 357 million in Q3 2020. Sales for Q3 2021 were up 15.6% on an organic basis compared to Q2 2021.
In the first nine months of 2021 revenue was Euro 1,031 million, down (27.9)% compared to Euro 1,429 million in the year ago period. On an organic basis, revenue decreased by (23.6)% excluding the impact of the disposal of the train toilet activities in Q2 2021.
The hedge book amounted USD 29.7 billion as of October 18, 2021. Safran continued to add hedges for 2024 and lower risk of knock-out. The book is composed of options with knock-out barriers spanning from 1.2350 to 1.31, representing a risk on the size of the book and on targeted rates in case of sudden increase of the euro.
2021 is hedged at a targeted hedge rate of USD 1.16 through knock-out options, for an estimated net exposure of USD 8.5 billion.
2022 is hedged at a targeted hedge rate from USD 1.14 to USD 1.16 through knock-out options, for an estimated net exposure of USD 9.0 billion.
2023 is hedged at a targeted hedge rate from USD 1.14 to USD 1.16 through knock-out options, for an estimated net exposure of USD 10.0 billion.
2024 is partially hedged at a targeted hedge rate from USD 1.14 to USD 1.16 through knock-out options; USD 6.8 billion hedged out of an estimated net exposure of USD 11.0 billion.
Full-year 2021 outlook confirmed for sales and profitability, further raised for free cash flow.
Safran reaffirms its FY 2021 outlook (compared with FY 2020 figures):
Safran is further improving its free cash flow guidance:
As a reminder, the full-year 2021 outlook is based on a number of assumptions, notably on civil aftermarket which relies on further fourth quarter improvement and LEAP deliveries which are expected to be around 900 (previously “800+“).
Safran will host today a conference call open to analysts, investors and media at 8.30 am CET which can be accessed at +33 (0)1 72 72 74 03 (France), +44 (0)207 194 3759 (UK) and +1 (646) 722 4916 (US) (access code for all countries: 70835114#).
Please ask for the “Safran” conference and state your name. We advise you to dial in 10 minutes before the start of the conference.
A replay of the conference call will be available until January 27, 2022 at +33 (0)1 70 71 01 60, +44 (0) 203 364 5147 and +1 (646) 722 4969 (access code for all countries: 425014601#).
The press release and presentation are available on the website at www.safran-group.com (Finance section).
Safran SA published this content on 29 October 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 29 October 2021 05:17:05 UTC.