Safran Q1 2025 slides: Revenue soars 16.7% on strong aftermarket performance

Introduction & Market Context

Safran SA (OTC:SAFRY) reported strong financial results for the first quarter of 2025, with revenue reaching €7,257 million, representing a 16.7% increase compared to the same period last year. The French aerospace supplier’s performance was driven by robust momentum across both civil aerospace and defense segments, with particularly impressive growth in aftermarket activities.

The results were announced during Safran (EPA:SAF)’s Q1 2025 revenue presentation on April 25, 2025, led by Chief Executive Officer Olivier Andries and Chief Financial Officer Pascal Bantegnie. The company maintained its full-year guidance despite ongoing concerns about potential tariff impacts.

As shown in the following chart highlighting key Q1 2025 metrics, Safran’s revenue growth significantly outpaced the previous year:

Quarterly Performance Highlights

Safran’s organic growth reached 13.9% (€863 million), complemented by a positive currency impact of €142 million, partially offset by a scope effect of -€32 million. The currency impact primarily resulted from the favorable evolution of the EUR/USD exchange rate, with the average spot rate at 1.05 in Q1 2025 compared to 1.09 in Q1 2024.

The following revenue bridge illustrates the components contributing to Safran’s Q1 2025 performance:

Services revenue grew significantly faster than Original Equipment (OE) sales, with services up 19.5% organically compared to 8.2% growth for OE. This trend was consistent across all business segments, highlighting the strength of Safran’s aftermarket business.

The civil aircraft engines aftermarket showed exceptional performance, with spare parts revenue increasing by 25.1% in dollar terms and services revenue growing by 17.6% in dollar terms year-over-year.

Segment Analysis

All three of Safran’s business segments contributed to the strong quarterly performance, with each posting double-digit growth rates.

The revenue breakdown by segment reveals the following performance:

The Propulsion segment led growth with revenue of €3,684 million, representing a 19.0% increase (16.4% organic) compared to Q1 2024. This growth occurred despite a 13% year-over-year decrease in LEAP engine deliveries to 319 units. The robust performance was primarily driven by the civil aircraft engines aftermarket.

Equipment & Defense revenue rose to €2,783 million, up 13.9% (10.8% organic), supported by strong growth in OE deliveries for nacelles, particularly for the G700 and A320neo programs. The segment also benefited from robust increases in avionics and good momentum in defense and space activities.

Aircraft Interiors posted revenue of €788 million, a 16.6% increase (13.8% organic), with business class seat deliveries increasing threefold compared to the same period last year. The segment also experienced strong momentum in cabin services, particularly in spares.

The following table shows the OE/Services revenue split by business segment:

Strategic Initiatives

Safran highlighted several strategic initiatives during the presentation, including progress toward the acquisition of Collins actuation and flight control activities. The company also outlined its approach to mitigating potential tariff impacts through various mechanisms, including:

• Modifying logistics flows
• Optimizing the use of Free Trade Zones and Bonded Warehouses
• Applying for duty drawback when applicable
• Actively extending USMCA exemption when applicable
• Entering commercial negotiations with customers for further impact reduction

The company acknowledged the global economic uncertainty created by tariffs but stated it was premature to quantify any financial impact. Consequently, the 2025 outlook excludes any potential impact from tariffs.

On the financial management front, Safran executed an early redemption of its 2028 OCEANEs (€730 million convertible bonds issued in 2021), with 93.3% converted into existing shares previously repurchased. The company also continued its share repurchase program, buying back approximately 1.5 million shares between January and April 2025 for cancellation.

Forward-Looking Statements

Safran confirmed its full-year 2025 outlook, excluding any impact from tariffs:

The company expects revenue to increase by approximately 10% for the full year, with recurring operating income between €4.8 billion and €4.9 billion. Free cash flow is projected to be between €3.0 billion and €3.2 billion, including an estimated French corporate surtax of €380-400 million.

Key assumptions supporting this outlook include a 15-20% increase in LEAP engine deliveries for the full year, despite the Q1 decline, and continued strong performance in the civil aftermarket, with spare parts expected to grow in the low teens and services in the mid-teens.

The company also highlighted potential watch items, including supply chain production capabilities, which could impact the achievement of these targets.

Safran’s Q1 2025 performance demonstrates the company’s resilience and strong market position in the aerospace sector, with particularly impressive growth in aftermarket activities across all business segments. While challenges remain, including potential tariff impacts and supply chain constraints, the company’s robust start to the year positions it well to achieve its full-year targets.

Full presentation:

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