Safran’s sales skyrocketed by a quarter in 2022 driven by the appreciation of the dollar, the currency in which it invoices its civil engine services, which are growing strongly and which constitute the group’s main source of income.
The aeronautical engine and equipment manufacturer’s revenue stood at 19,040 million euros, according to its results published on Friday, which show an “exchange rate effect of 1,382 million euros that reflects a positive effect of billing in dollars.” At constant perimeter and exchange rates, the increase in billing is 15.8%.
Resumption of air traffic
Revenues were boosted by the recovery in global air traffic, especially in the medium haul: planes flying more, companies needing more spare parts and maintenance operations.
These civil engine services grew by 29.3% and alone account for almost a third of Safran’s revenue. And since they are invoiced in dollars and the American currency has appreciated a lot, 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 a third. The engine manufacturer initially had 1,200 engines but had to face, like the aircraft manufacturers, the difficulties of its supply chain, weakened during the pandemic, to pick up the pace.
“Purely accounting entry”
In total, revenues from the Propulsion division increased by 18.3%, as did those from the Equipment and Defense business (+10.6%) and Aircraft Interiors-cabins, seats and in-flight entertainment (+25, 1%). This enabled the group to generate an adjusted net profit of €1.18 billion.
In the published data, however, Safran suffered a net loss of €2.46bn due to a €4.5bn charge related to the need to write down the value of its portfolio of currency derivatives in its accounts.
Like all groups, Safran hedges currency risks by buying currencies for future years at pre-agreed rates. These exchange rate hedges were entered into at a rate that had become too expensive in relation to the fall of the euro against the dollar during the semester.
By 2023, the group expects “at least 23 billion euros” in revenue and a one-third increase in its current operating profit to “around 3 billion euros.”
Source: BFM TV
