Safran S.A.

Safran reported H1 revenue of EUR 17.6 billion, up 19% reported and more than 20% organically. Recurring operating income was EUR 3.2 billion, up 29%, and the margin reached a record 18.4%, up 140 basis points. Net income attributable to the parent rose 21% to EUR 1.9 billion, and EPS was EUR 4.63. Free cash flow increased 43% to EUR 2.6 billion, with EBIT-to-cash conversion above 80%. In Propulsion, revenue was EUR 9.2 billion, up 28% organically, and recurring operating income was EUR 2.3 billion, with a 24.5% margin. Equipment & Defense revenue was EUR 6.9 billion, up 14% organically, and Aircraft Interiors revenue was EUR 1.5 billion, up 6.6% organically. For 2026, management said revenue should increase in the mid-teens and be above EUR 36 billion, recurring operating income guidance is being raised by EUR 300 million at midpoint, and free cash flow guidance is also being raised by EUR 300 million at midpoint. Spare parts and services revenues are now expected to be up in the mid-20s, and LEAP deliveries are expected to be up in the high teens.

Olivier Andriès said the first half was marked by stellar civil aftermarket demand, a strong ramp in LEAP and M88 deliveries, and record financial performance. He emphasized that the Middle East conflict barely affected results and that Safran is continuing to expand capacity and strengthen its industrial footprint, including new facilities in Mexico and investments in defense electronics and navigation. His tone was confident and forward-looking, especially on LEAP, defense, and future technologies such as RISE and hybrid-electric propulsion.

Pascal Bantegnie highlighted that revenue of EUR 17.6 billion reflected a EUR 742 million negative FX impact and a EUR 550 million positive scope effect, while recurring operating income reached EUR 3.2 billion and margin expanded by 140 basis points to 18.4%. He said one-offs totaled minus EUR 177 million, net financial expense was EUR 123 million, and the reported tax rate was 33% because of a EUR 322 million French surtax impact; without that surtax, the effective tax rate would have been 22%. He also noted strong cash generation from EBITDA growth and working capital, CapEx of EUR 750 million, net cash of EUR 1.7 billion, and share repurchases of 2.8 million shares for EUR 875 million between January and July 2026.

Analysts focused heavily on propulsion margin, LEAP economics, workscope, and whether Safran could sustain the strong aftermarket trend. Management said the 24.5% propulsion margin was driven mainly by CFM56 and LEAP spare parts, favorable workscope mix, higher spare-engine volume, and strong military engine performance. On workscope, Safran said demand still exceeds supply, MRO capacity remains constrained, and the heavy-workscope trend should continue for at least the next two years. On the Airbus aftermarket economics discussion, management said any change would have to be holistic and reflect the long payback of engine development, since engines are sold at a loss for years before shop-visit profits arrive.