Safran S.A.

Safran reported H1 revenue of EUR 17.6 billion, up 19% on a reported basis and more than 20% organically. Recurring operating income rose 29% to EUR 3.2 billion, with margin improving 140 basis points to a record 18.4%; net income attributable to the parent was EUR 1.9 billion, up 21%, and EPS was EUR 4.63. Free cash flow increased 43% to EUR 2.6 billion, with EBIT-to-cash conversion above 80%. On operations, H1 LEAP deliveries were 1,030, up 41% year over year, and civil engine spare parts rose 28% in dollar value while civil engine services grew by more than 40%. For 2026, Safran now expects revenue to increase in the mid-teens to above EUR 36 billion, recurring operating income guidance is raised by EUR 300 million at midpoint, free cash flow guidance is also raised by EUR 300 million at midpoint, spare parts and services revenues are 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 exceptional, driven by stellar civil aftermarket demand, strong ramp-up in LEAP and M88 deliveries, and record financial performance. He stressed that the Middle East conflict had only a limited impact, with civil aftermarket staying well above pre-conflict assumptions. He also highlighted capacity expansion, defense momentum, and continued portfolio discipline, including divestments and investments in industrial resilience and future technologies such as RISE and hybrid-electric propulsion.

Pascal Bantegnie emphasized that revenue of EUR 17.6 billion reflected both organic growth and scope effects, while the EUR 742 million currency headwind was partly offset by EUR 550 million of scope contribution. He said recurring operating income climbed to EUR 3.2 billion as a result of strong civil aftermarket, defense strength and operational excellence, and noted one-offs of minus EUR 177 million, net financial expense of EUR 123 million, and a reported tax rate of 33% including a EUR 322 million French surtax impact. On cash, he highlighted EUR 2.6 billion of free cash flow, EUR 750 million of CapEx, net cash of EUR 1.7 billion, and continued buybacks totaling 2.8 million shares for EUR 875 million between January and July 2026.

Analysts focused heavily on the unusually high propulsion margin, the durability of heavy workscope and pricing, and whether LEAP profitability could rise further as volumes and third-party MRO activity evolve. Management said propulsion margin was boosted by CFM56 and LEAP spare parts, favorable workscope mix, strong spare engine volumes and M88 strength, and that heavy workscope should remain a tailwind for at least the next two years. Questions also centered on Airbus’s desire to rethink OE versus aftermarket economics; Safran said any discussion must be holistic and preserve its required return, because engine makers take losses on OE and recover value later through aftermarket. On LEAP RPFH, management said recognition of profit depends on the Maverick HPT blade introduction timing.