This article first appeared on GuruFocus.
Revenue: EUR17.6 billion, up 20% on an organic basis.
Recurring Operating Income: EUR3.2 billion, a 29% increase, with an operating margin of 18.4%.
Free Cash Flow: EUR2.6 billion, up 43% year over year.
LEAP Engine Deliveries: 1,030 engines in H1, a 41% increase year over year.
Net Income: EUR1.9 billion, up 21% year over year.
Earnings Per Share: EUR4.63.
Propulsion Revenue: EUR9.2 billion, up 28% organically.
Equipment & Defense Revenue: EUR6.9 billion, up 14% organically.
Aircraft Interiors Revenue: EUR1.5 billion, up 6.6% organically.
Operating Margin for Propulsion: 24.5% of sales.
Operating Margin for Equipment & Defense: 13.1%.
Operating Margin for Aircraft Interiors: 3.7%.
Spare Parts Sales for Civil Engines: Increased by 28% in dollar value.
Civil Engine Services Growth: More than 40% in dollar value.
Net Cash Position: EUR1.7 billion.
Release Date: July 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Safran SA (SAFRF) reported a 20% organic revenue increase, reaching EUR17.6 billion, with a 29% rise in recurring operating income to EUR3.2 billion.
The company delivered 1,030 LEAP engines in the first half, marking a 41% year-on-year increase, and maintained strong aftermarket demand for civil engines.
Free cash flow increased by 43% to EUR2.6 billion, demonstrating strong cash generation and financial performance.
Safran SA (SAFRF) raised its full-year guidance, reflecting confidence in continued strong performance across its business segments.
The company is expanding its global footprint with new facilities in Mexico and Singapore, enhancing its maintenance and production capabilities.
Negative Points
The ongoing Middle East crisis and currency volatility posed challenges, although they were managed effectively.
Despite strong performance, the company faces potential headwinds from increased material costs and geopolitical uncertainties.
The French corporate surtax impacted the reported tax rate, increasing the effective tax burden on the company.
Supply chain challenges affected helicopter turbine original equipment (OE) deliveries, indicating ongoing operational hurdles.
The Aircraft Interiors segment, while improving, still faces challenges in achieving higher margins and cash flow positivity.
Q & A Highlights
Q: Can you explain the drivers behind the exceptional 24.5% margin in Propulsion, given the increase in LEAP deliveries and service sales? A: The stellar performance was driven by strong spare parts sales, particularly on CFM56 and LEAP engines, benefiting from favorable workscope mix and pricing effects. Additionally, a significant volume of spare engines was delivered, and military engines, notably the M88, performed well. The one-off in Propulsion relates to commercial discussions on past operations, with cash impacts expected at the end of this year and next year. – Pascal Bantegnie, CFO
Story Continues
Q: Could you provide an update on the divisional EBIT margin guidance for the full year, especially for Equipment & Defense? A: We are raising our full-year outlook. For Propulsion, the margin should be at least at the upper end of the 20% to 24% guidance, around 24%. Equipment & Defense is expected to beat the 50 basis points margin improvement, and Aircraft Interiors should see at least a one-point improvement. Defense and nacelle businesses are key contributors to margin improvement. – Pascal Bantegnie, CFO
Q: The guidance upgrade for services implies a deceleration in the second half. What are the key drivers for this? A: The main driver for services growth is the increase in LEAP shop visits, which have grown by over 30% due to the expanding LEAP in-service fleet and increasing workscope. The spare parts growth was driven by a higher proportion of heavy workscope. Despite the growth, the accounting strategy for RPFH profits means no impact on profits from revenue growth in H2. – Olivier Andries, CEO
Q: How do you see the evolution of workscope as we move into H2 and beyond? Will it continue to be a tailwind? A: The workscope has been driven by material availability, which has improved, creating a tailwind. We expect this trend of heavy workscope shop visits to continue for at least the next two years, through 2027 and 2028. – Olivier Andries, CEO
Q: Can you update us on the LEAP OE profitability journey and the spare engine ratio expected for this year? A: LEAP OE is already profitable when combining installed and spare engines. Installed engines remain slightly EBIT negative, but spare engines are strongly positive. In H1, 60% of expected spare engine volumes were delivered, with a spare engine ratio in the low double digits, expected to normalize to 10%-12% in H2. – Pascal Bantegnie, CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.