Paris, November 29, 2018

Safran has delivered and even exceeded its March 2016 ambitions.

Ideally positioned to capture growth from Aerospace & Defense markets thanks to leading Tier 1 positions.

Strengthen market leadership by:

  • Reinforcing its key leading positions as a full-fledged civil and military engine manufacturer
  • Becoming the No 1 Aerospace Equipment supplier in the next 15 years
  • Increasing investment in innovation to lead the future in the industry


High-quality execution and operational performance excellence:

  • Extending LEAP’s success with best-in class OE and Aftermarket
  • Restoring the performance of Aircraft Interiors businesses to rebuild customers’ trust in a sector key for airlines
  • Reinforcing Safran competitiveness with a particular emphasis on delivering commercial, technological and product synergies across the Group


Strong organic growth, further improved profitability and cash generation:

  • Organic revenue growth in a mid-single digit range on average over the 2019-2022 period, including civil aftermarket growing in a high single digit range
  • Recurring operating income margin trending to a 16-18% range by 2022
  • Strong cash generation driven by a 50% increase in EBITDA between 2018 and 2022: EBIT to FCF conversion above 50% each year and trending above 60% in 2022

Balanced and disciplined capital allocation policy:

  • Growing self-funded R&D and CAPEX to fuel future growth
  • Increased cash returns to shareholders:
    • Full execution of the Euro 2.3 Billion buyback program initiated in 2018; intention to increase the share buyback program by a further €700M
    • Practice to be reviewed by Board of Directors in 2020 in order to ensure growing and attractive return for shareholders


All figures in this press release represent adjusted data, except where noted (for definitions see Notes)

Executive commentary

CEO Philippe Petitcolin commented:

“We have delivered and even exceeded all our March 2016 ambitions. Our focus on execution and operational excellence, coupled with driving innovation and investment in R&T, position the Group to set new ambitions and prepare the future of our industry. Furthermore, the ramp up of LEAP production is proceeding and the integration of Zodiac Aerospace is well underway”
Safran (Euronext Paris: SAF) is today hosting its 2018 Capital Markets Day at Safran Campus with investors and financial analysts.

Ross McInnes, Chairman of the Board of Directors, will open the event, which will be hosted by Philippe Petitcolin, Chief Executive Officer, with the participation of members of Safran’s Executive Committee.


Main topics to be covered by the Capital Markets Day are:

1. Perspectives and Strategy

Safran will leverage its leading positions in Aerospace & Defense to achieve new ambitions.

Positive trends are expected in both the commercial aircraft and military markets that will ensure a solid momentum of new aircraft deliveries and retrofits. Safran has set clear objectives in all its businesses.

Safran’s ambition is to remain a full-fledged engine manufacturer and a key player in the future of propulsion by investing in new technologies, as well as to capture the aftermarket upside through managing its large installed base of civil engines.

Today, Safran is the second worldwide Aerospace Equipment supplier and its ambition is to become the world leader in the next 15 years, notably by increasing its competitiveness and acting as a key leader in equipment for more electrical aircraft. The acquisition of Zodiac Aerospace will reinforce Safran’s Electronics & Defense /Electrical & Power activities and will leverage fully Aerosystems’ portfolio.

In Aircraft Interiors, Safran’s priority is to turn around performance and to rebuild customer confidence in order to reach former profitability levels.


2. Financial framework

Safran will continue on its path of strong and profitable growth.

Mid-single digit organic revenue growth (at an estimated average spot rate of USD 1.25 to the Euro over 2019-2022) should be broad-based as all activities should contribute positively, particularly civil engines OE, Aerospace services and Aircraft Interiors.

Recurring operating income margin should trend to a 16% to 18% range by 2022 after the completion of the CFM56/LEAP transition, the recovery of Aircraft Interiors activities, the full impact of the annual €200M pre-tax run rate cost synergies and the benefits of stabilized hedged rates. In 2022, Safran’s operating margin ambition is expected to be:

  • above 20% for Propulsion
  • above 16% for Equipment
  • above 10% for Defense
  • around 15% for former Zodiac Aerospace activities including all synergies accounted for in other Safran businesses (or 13% excluding part of the synergies accounted for in other businesses).

R&D spending will enter a new cycle including assumptions for NMA developments (if it is launched), targeted efforts on Zodiac and a 30% increase in R&T. Total self-funded R&D will increase but will remain at around 6% to 7% of sales over the period.

Free cash flow generation will remain a strong focus over 2018-2022 with EBITDA growing by ~50%. Working capital is expected to increase over the period due to a likely significant reduction of advance payments, a stability in stocks and inventories and a gradual increase of the cash contribution to be received from Rate Per Flight Hours contracts (RPFH).
Capex should represent around 4% of sales over 2018-2022 and be allocated notably to build up LEAP MRO capacity as well as to upgrade and streamline Zodiac Aerospace production facilities.

As a result, FCF is expected to grow every year. EBIT to FCF conversion should be above 50% each year and trend above 60% in 2022.

Safran will maintain its disciplined capital allocation:

  • The priority will focus on organic development. Safran does not currently expect to make any further major acquisitions
  • Following the Zodiac Aerospace acquisition, Safran reaffirms its objective of maintaining a strong investment grade profile, and the intention to deleverage further going forward
  • Safran will continue to increase cash returns to shareholders:
    • The €2.3bn buyback program, executed at 50% today, will be completed in 2019
    • The intention is to increase the share buyback program by a further €700M to avoid the potential dilution from the outstanding convertible bonds
  • As a result, over 75% of cumulated FCF is expected to be returned to shareholders over 2018-2022 through share buybacks and with the existing dividend practice
  • The Board of Directors will review the practice in 2020 to ensure growing and attractive return for shareholders.


3. CFM56-LEAP : Transition and Aftermarket

Safran will complete the CFM56 to LEAP transition underway to reap the benefits from the massive CFM56 and LEAP installed base.

Excellent progress has been made on the transition from CFM56 to LEAP:

  • LEAP engine has been delivering on all its promises regarding performance, reliability and utilization, making it the engine of choice for airlines
  • Top priority is meeting customers’ demand by addressing the challenges of an unprecedented production ramp up. Safran has built up a strong production management system in order to achieve the production targets agreed with customers

LEAP cost reduction is on target and continues to move forward as planned, with progress coming from both the Group’s plants and supplier base.

CFM56 and LEAP engines will remain the core drivers of the profitable and fast growing civil aftermarket business of Safran:

  • The T&M business model will continue to dominate for a long period, thanks to the significant fleet of CFM56 fleet in service
  • The Rate Per Flight Hours contracts contribution will gradually increase driven by the LEAP ramp up reflecting the increased demand of customers
  • Safran is well prepared for this gradual transition and will expand its MRO network

These trends provide a strong visibility for the expected high single digit growth on average of the civil aftermarket of Safran from 2018 to 2022.


4. Integration of Zodiac Aerospace and Aircraft Interiors recovery

The integration process has successfully moved beyond the first steps and is gaining momentum with regard to:

  • Accelerating Zodiac Aerospace operational recovery notably by rolling out best practices
  • Delivering the €200M of pretax run rate cost synergies by 2022. These cost synergies are fully confirmed and further upside has been identified

In Aircraft Interiors, the new management, together with all the teams, are striving to rebuild customers’ trust by transforming a segmented business into an efficient engineering and industrial key player. Safran will realize the full potential of Zodiac Aerospace former activities and deliver the expected improved performance.


5. Innovation

Safran is already well advanced in preparing the future to embark on the next generation Aerospace & Defense programs.

Key areas of focus are:

  • Improving aerospace propulsion efficiency
  • Leading the way towards the more electrical aircraft
  • Driving innovation for the connected cabin
  • Making additive manufacturing a broad based industrial reality

This acceleration of the innovation strategy will allow Safran to remain the partner of choice of OEM and reinforce its growth potential for the next decades.


6. A clear roadmap

Safran is the most successful Aerospace & Defense company and will remain focus at the same time on both short and long term with:

  • An extreme attention to execution and operational excellence
  • Growing investment in R&T and innovation to prepare the future.


Live webcast and replay

The event will start at 13:00 CET in Vilgénis on November 29, 2018. It can be watched on a live webcast at the following address:

A phone conference will be organized so analysts and investors may follow the event and participate in the Q&A session. The dial-in numbers are: +33 1 76 70 07 94 (France), +44 207 192 8000 (United Kingdom), and +1 631 510 7495 (United States). Participant code is: 3181737.

The presentations may be downloaded and subsequently a replay will be made available at: