Safran, a French jet engine manufacturer, reported a significant increase in revenue and operating profit for 2023, increased its dividend, and forecasted additional growth this year due to robust demand for engine services. The company's shares experienced a sharp rise in early Paris trading and were up by 4.3% by 0833 GMT.
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The company stated that its full-year recurring operating income increased by 31% to 3.166 billion euros ($3.4 billion) as revenue rose by 22% to 23.199 billion. Its civil aftermarket revenue, which is closely monitored, increased by 33% in dollar terms. Safran also announced that it would increase its dividend to 2.20 euros per share, which Equity Research analysts said was higher than the market expectations of approximately 2.10 euros. Safran collaborates with GE Aerospace to produce the LEAP jet engine for all Boeing 737 MAX jets and about half of the A320neo jets sold by Airbus. Its CFM joint venture competes with Pratt & Whitney for engine sales. Airbus, a key client of Safran, also released its full-year figures on Thursday, announcing a special dividend following record orders and a 4% increase in its core operating profit.
Safran CEO Olivier Andries informed reporters that the U.S. aviation regulator's restrictions on Boeing's 737 production growth plan - due to defects in the manufacturing of a door plug that detached from a jet last month - could impact LEAP-1B engine deliveries, but it was too early to quantify this. Andries dismissed the possibility of shifting production from the Boeing version of the LEAP to the Airbus version, known as LEAP-1A, in 2024 or the near term, and stated that Airbus had not requested this. However, he did not exclude the possibility of CFM examining the relative capacity requirements of the two versions for 2025 and beyond.
He also anticipated that Boeing would wait for the results of an FAA audit of its factories before making any decisions on supplier production rates. Safran reported that LEAP deliveries increased by 38% in 2023, slightly below the target. The CEO also informed reporters that Safran is negotiating with the Italian government regarding Rome's recent decision to block a portion of its planned $1.8 billion acquisition of Collins Aerospace's flight control systems business. Last November, Prime Minister Giorgia Meloni vetoed the acquisition of Collins' Italian subsidiary Microtecnica under special "golden power" rules, citing national security concerns. Andries stated that both Safran and Collins filed protests in Italy in January, adding that dialogue was the preferred solution.