Safran raises dividend 63% after sharp revenue and operating income increase in 2023

Jet engine manufacturer Safran reported a 22% increase in adjusted revenue for the full year of 2023, up from circa $20.40bn in 2022 to $24.98bn in 2023. Adjusted recurring operating income for the full year rose 31% from $2.59bn in 2022 to $3.41bn in 2023. The company increased its dividends from 1.35 euros ($1.46) per share to 2.20 euros (2.37) per share, marking a 63% increase. Shares were up 4.06% at 15:30 GMT on February 15, 2024, following the release of the financial performance results. Free cash flow went up 10% to $3.17bn in 2023. Safran CEO Olivier Andries said in an earnings call: “This excellent performance was notably driven by the continued recovery of the commercial aftermarket.” Safran produces around half of the CFM engines and the LEAP engine in a 50/50 joint production with GE Aerospace. LEAP deliveries grew by 38% despite supply chain constraints in 2023. The company had over 2,500 LEAP engines ordered in 2023, with Air Arabia ordering 240 LEAP 1-A engines and easyJet ordering over 300 in 2023. The company has a total backlog of 10,675 engines and expects LEAP deliveries to increase by 20-25% in 2024. The company also expects revenue to be around $29.52bn and recurring operating income to close at $4.31bn in 2024. Andries said: “We remain totally focused to meet customer demands by managing the ramp up in OE deliveries despite supply chain constraints.” He added that with the FAA audit on the Boeing 737 MAX halting production ramp up, that there “could be an impact” on the CFM engine’s production and on the OEM program’s financial outlook for 2024, but “cannot quantify” the level it might have. He added: “It all depends on when the FAA will waive their decision to suspend the rate increase of the MAX”. Andreis also highlighted that the company’s turnaround time for CFM56 engines is currently at 90 days where it was 65-70 days before Covid, noting that turnaround “has deteriorated” as a result of Covid and the subsequent supply chain issues as they wait for missing parts. The company has a target to “get back to a nominal level of 65-70 days on CFM56” for 2024.