Safran Reports Rise in Operating Profit

LONDON—French aerospace supplier Safran SA Friday said first-half operating profit rose 11.1%, propelled by strong demand for new aircraft engines.

Operating profit was 1.3 billion euros ($1.4 billion) compared with €1.2 in the year prior period. Sales in the January through June period advanced 6.3% to €8.9 billion.

Safran reported a 25.9% decline in its adjusted net profit to €862 million after the prior-year figure was bolstered by the one-time gain from a disposal.

Strong demand for Airbus Group SE and Boeing Co. jetliners has helped lift Safran's results. The French company makes engines and other airliner equipment for some of the world's most popular planes.

"Production rates of equipment and engines for current-generation aircraft have never been higher," Safran chief financial officer Philippe Petitcolin said. Operating income reached a company record 14.6% of sales, he said.

Airbus this month delivered the first A320neo single-aisle jet powered by Leap-1A engines made by a joint venture of Safran and General Electric Co. Production of those engines is accelerating quickly amid strong demand for the plane.

Mr. Petitcolin said "the challenge of the Leap ramp-up will intensity" and that the company was "fully mobilized" to deliver.

United Technologies Corp., which offers a rival engine for the Airbus plane, struggled early to get engines delivered in the proper configuration. Airbus has been stuck with more than 20 planes without engines as a result. United Technologies has said the issue was being fixed and that engine deliveries would accelerate to allow Airbus to meet this year's delivery target for all A320neo planes using its turbine.

Safran confirmed its full-year guidance, including an increase in sales at low-single-digit levels and a 5% increase in adjusted recurring operating income. The company stuck to its plan to reach break-even on shipments of Leap-1A engines before the end of this decade.

Engine-related revenue, Safran's biggest business, delivered the strongest growth at 8.3%, plane equipment sales rose 5.3% and security sales rose 7.2%. Only defense sales declined, down 5.2%.

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(END) Dow Jones Newswires

July 29, 2016 01:45 ET (05:45 GMT)

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