Safran’s Q1 Revenue Surge to €7.26B Fuels Optimism Amid Global Supply Chain Strains

France’s Safran SA delivered a robust first-quarter performance, reporting adjusted revenue of €7.26 billion—a 16.7% year-over-year increase that surpassed analysts’ €7.05 billion consensus. The aerospace and defense giant reaffirmed its full-year targets, signaling confidence in its ability to navigate supply chain disruptions and geopolitical headwinds.

Segment Strength Across All Sectors
Safran’s growth was broad-based, with each of its three core divisions contributing to the surge:
- Propulsion (€3.68 billion, +19% YoY): Driven by strong civil aftermarket demand, including spare parts for CFM56 engines and services revenue from LEAP “rate per flight hour” contracts.
- Equipment & Defense (€2.78 billion, +13.9% YoY): Benefited from defense system sales and aftermarket growth in landing gear and avionics.
- Aircraft Interiors (€788 million, +16.6% YoY): Highlighted a 290% jump in business-class seat deliveries, reflecting airlines’ premium cabin upgrades.

LEAP Engine Challenges and Reaffirmed Targets
Despite a 13% drop in LEAP engine deliveries to 319 units (vs. 367 in Q1 2024), Safran remains bullish on its full-year outlook. The company attributes the decline to supply chain bottlenecks but maintains its goal of a 15–20% increase in deliveries for fiscal 2025. CEO Olivier Andriès emphasized that the LEAP program’s long-term health remains intact, citing FAA/EASA certification of durability upgrades for the LEAP-1A engine in late 2024 as a key milestone.

Mitigating Tariff Risks and Regulatory Hurdles
Safran faces potential headwinds from U.S. tariffs on European goods, but the company has implemented strategies to offset impacts, including optimizing logistics via Free Trade Zones and pursuing USMCA exemptions. Regulatory approvals for its acquisition of Collins Aerospace’s actuation business remain pending, with a proposed divestment of its North American electromechanical actuation division to Woodward.

Financial Fortitude and Shareholder Returns
The company’s financial health is underpinned by its 2025 guidance:
- Revenue growth of ~10%, aligning with €4.8–4.9 billion recurring operating income.
- Free cash flow of €3.0–3.2 billion, excluding a €380–400 million hit from France’s corporate surtax.
- A proposed 32% dividend increase to €2.90 per share, pending shareholder approval.

Conclusion: A Resilient Play in Aerospace Recovery
Safran’s Q1 results demonstrate its ability to capitalize on post-pandemic civil aerospace recovery and defense spending growth. With aftermarket demand surging across all segments and strategic acquisitions on the horizon, the company is well-positioned to meet its 2025 targets. However, risks persist: supply chain constraints and tariff-related costs could dampen margins, and regulatory delays may impact the Collins deal.

Investors should note that Safran’s hedging program ($54.1 billion covered at a $1.12 hedge rate) and operational discipline provide a buffer against volatility. With organic revenue growth outpacing forecasts (13.9% vs. 13.3% expected) and the stock trading at a reasonable 14.5x 2025 estimated EPS, Safran offers a compelling balance of resilience and growth potential in an uncertain macroeconomic environment.

As Andriès stated, “The first quarter confirms the robust momentum of our strategic plan.” For now, the engines are firing on all cylinders.