Safran (SAF) CMD 2024 summary

Strategic vision, market outlook, and positioning

• Positioned for sustained, profitable growth, leveraging strong demand in civil (80% of revenue) and defense (20%) markets, with civil air traffic expected to grow at 3.2% CAGR over 20 years and defense spending at record highs.

• Robust demand for new aircraft (34,500 forecasted deliveries in 20 years) and a large installed propulsion fleet drive both original equipment and aftermarket services.

• Strategic priorities include scaling up in defense, preparing for next-generation aircraft, and leading in decarbonization and digitalization.

• Focus on supply chain resilience through double sourcing, strategic investments, and supplier performance management, with production ramp-up and new facilities.

• Key risk factor remains supply chain production capability.

Financial guidance and capital allocation

• 2024 revenue guidance at €27.1bn, recurring operating income €4.7–4.8bn, and FCF €2.8–3.0bn; 2025 outlook projects ~10% revenue growth, LEAP deliveries up 15–20%, and services mid-teens growth.

• 2028 ambition: high single-digit revenue CAGR, recurring operating income €6–6.5bn, FCF €15–17bn (2024–2028), and operating margin targets by division (propulsion: low 20s%, equipment & defense: mid-teens%, interiors: ~10%).

• 2021–2025 revenue CAGR expected at 18%, with operating income CAGR at 28%, exceeding previous targets despite supply chain and inflation challenges.

• Capital allocation prioritizes R&D, capex, dividends (40% payout), €5bn share buybacks (2025–2028), and targeted M&A, with a plan to return ~70% of FCF to shareholders.

• Significant organic investments planned, including €1bn in MRO capacity and €5.2bn in R&D (2024–2028), with a focus on sustainable aviation and digital transformation.

Aftermarket and LEAP transition

• CFM56 aftermarket remains strong, with shop visits plateauing until 2027; LEAP shop visits to more than double by 2030, peaking at over 5,000 by 2040.

• LEAP engine is the preferred choice on narrowbody platforms, with over 20,400 engines ordered and a 60% win rate on A320neo.

• LEAP aftermarket revenue to reach parity with CFM56 by 2028, with a balanced model between long-term service agreements and spare parts sales.

• Open MRO market strategy for LEAP, targeting >50% third-party share by 2040, and ramp-up of in-house capacity to 1,200 shop visits per year.

• LEAP profit recognition to start in 2025 for LEAP-1A and in 2026 for LEAP-1B, with most portfolio margin recognized after 2030.