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 was EUR 3.2 billion, up 29%, with margin at a record 18.4%, up 140 basis points; net income attributable to the parent was EUR 1.9 billion, up 21%, and EPS was EUR 4.63. Free cash flow was EUR 2.6 billion, up 43%, and net cash was EUR 1.7 billion. By division, Propulsion revenue was EUR 9.2 billion and margin was 24.5%; Equipment & Defense revenue was EUR 6.9 billion with margin at 13.1%; Aircraft Interiors revenue was EUR 1.5 billion with margin at 3.7%. For 2026, revenue is expected to increase in the mid-teens to above EUR 36 billion, recurring operating income guidance was improved by EUR 300 million at midpoint, free cash flow guidance was improved by EUR 300 million at midpoint, spare parts and services revenue is expected to be up in the mid-20s, and LEAP deliveries are now expected to be up in the high teens.

Olivier Andriès described the first half as “exceptional,” driven by strong civil engine aftermarket demand, a ramp-up in LEAP and M88 deliveries, and record financial performance. He emphasized that the Middle East conflict had only a limited impact on operations and said civil aftermarket activity remained above pre-conflict expectations. Strategically, he highlighted capacity expansion, the buildup of the LEAP maintenance ecosystem, and continued investment in future technologies such as RISE and hybrid-electric propulsion.

Pascal Bantegnie walked through the financial drivers behind the quarter, pointing to revenue of EUR 17.6 billion, recurring operating income of EUR 3.2 billion, margin of 18.4%, and free cash flow of EUR 2.6 billion. He said the gross margin improvement was driven by revenue growth, civil engine aftermarket strength, defense activity, and operational excellence, while the EUR 742 million FX headwind and EUR 550 million positive scope effect also mattered. He detailed cash generation, noting inventory growth was more than offset by advances and deferred income, CapEx was EUR 750 million, net cash stayed at EUR 1.7 billion, and buybacks totaled 2.8 million shares for about EUR 875 million between January and July 2026.

Analysts focused heavily on the unusually high 24.5% Propulsion margin, asking what drove it and whether it can persist as LEAP deliveries rise and aftermarket mix changes. Management said the margin strength came from CFM56 and LEAP spare parts, favorable workscope, pricing, and military engine deliveries, and said the full-year margin should be at the upper end of the 22% to 24% range, possibly slightly above 24%. Questions also centered on workscope durability, LEAP profitability, and Airbus’s push to reset OE/aftermarket economics; Safran said workscope tailwinds should last for at least the next two years, LEAP is already profitable on an installed-plus-spares basis, and any business-model discussion would have to preserve Safran’s internal rate of return and be assessed holistically across OE and aftermarket.