Safran Group raises 2028 outlook, half-year performance in line with expectations

Investing.com - Safran Group’s 2025 second-half results are largely in line with expectations, while the company significantly raised its financial outlook for 2028. The company reported an adjusted revenue of approximately €16.6 billion for the second half of 2025, up 16% year-over-year. According to Royal Bank of Canada Capital Markets, this figure is about 1% below market consensus expectations.

Adjusted EBIT (Earnings Before Interest and Taxes) was approximately €2.7 billion, with a profit margin of 16.2%, also about 1% below expectations. Diluted earnings per share were €3.80, below the market consensus of €4.23, while free cash flow (FCF) was approximately €2.1 billion, exceeding the market expectation of €1.8 billion, according to Royal Bank of Canada.

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For 2026, the company’s preliminary outlook is slightly above expectations. Revenue growth is expected to reach low to mid double digits, with recurring EBIT of €6.1 to €6.2 billion, implying a profit margin in the low to mid 17% range, and free cash flow of €4.4 to €4.6 billion. In comparison, market consensus expects revenue growth of 12.6%, adjusted EBIT of about €6.1 billion, and free cash flow of approximately €4.2 billion.

LEAP engine deliveries are expected to increase by 15% year-over-year, consistent with guidance provided by GE in its Q4 and full-year results announced in January. Spare parts revenue is expected to achieve mid double-digit growth, while service business is projected to grow by about 20%.

Safran has also raised its 2028 targets. It now expects revenue from 2024 to 2028 to grow at a compound annual growth rate of about 10%, up from the previous high single-digit growth expectation.

Recurring operating income is now forecasted to reach €7.0 to €7.5 billion, higher than the previous range of €6.0 to €6.5 billion. Free cash flow from 2024 to 2028 is now estimated at around €21 billion, up from the previous range of €15 to €17 billion, with a recurring EBIT conversion rate of approximately 70%.

The company has increased its 2028 recurring EBIT target to €7.0 to €7.5 billion and expects LEAP engine deliveries to reach about 2,600 units in 2028, up from the previous estimate of 2,500 units.

Although the results are largely in line with expectations, Royal Bank of Canada analyst Ken Herbert emphasized the 14% outperformance in free cash flow in 2025 and the “significant improvement in the 2028 outlook.”

“While we believe the upward revision of the medium-term outlook should have a positive impact on market sentiment, we note that market consensus expectations are already at the upper end of the upward revision range,” they pointed out.

Additionally, Jefferies analyst Chloe Lemari stated, “The updated 2028 outlook now places the consensus expectations slightly above the upper end of the revenue range, which is within expectations, but the free cash flow of €21 billion, consistent with consensus, is surprising to us and is a positive signal.”

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