Safran Revenue Rises on Sustained Demand for Jet Engines

   Robert Wall 
 

French aerospace supplier Safran SA said Thursday its third-quarter revenue rose 6.8% amid sustained demand for engines powering Boeing Co. and Airbus Group NV jetliners and a surge in deals for turbine spare parts.

Safran said sales in the July through September period reached 3.6 billion euros ($4.6 billion). Sales rose across its units, except for the defense division, where revenue dipped 0.8%.

Sales in the first nine months of the year rose 5.2% on a reported basis, reaching about 10.8 billion euros ($13.8 billion).

The company also confirmed its earnings guidance for the full year. Adjusted recurring operating income is set to increase by a percentage approaching the "mid teens" in 2014, compared with "low double digit" growth previously. The company lifted its guidance in announcing half-year results.

"Our nine-month performance provides comfort to achieve our outlook for 2014 and strong confidence for success in the longer term," Chairman and Chief Executive Jean-Paul Herteman said in a statement.

Safran has benefited from surging demand for Airbus and Boeing jetliners that is causing both plane makers to boost output. Boeing said recently it would lift output of the 737 single-aisle jet to 52 aircraft per month in 2018. The aircraft is exclusively powered by engines built by Safran in a joint venture with General Electric Co.

Mr. Herteman said the company and GE had collectively booked orders for 7,700 so-called Leap engines. The product is the sole engine offered on the Boeing 737 Max, an upgraded model of the U.S. plane maker's most popular jet, and it competes for orders on the Airbus A320neo.

Despite the strong results, Safran signaled continued uncertainty about some payments from government customers. Cash flow for the year will be dependent on payments from those customers, where it said "significant uncertainty remains."

Safran said it enjoyed a EUR7 million currency tailwind in the third quarter. The company also said it had locked in a lower currency hedge rate for the euro against the dollar for next year, with an exchange rate of $1.25, or one cent better than in 2014.

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