Safran Earnings: Results in Line With 2023 Guidance

Wide-moat Safran reported strong first-quarter revenue of EUR 5.2 billion, in line with management’s outlook for the year. All segments contributed to the group's organic revenue growth at 25%—notably services in all divisions and civil aftermarket in particular, and a good increase in LEAP deliveries. The recovery observed in narrowbody air traffic ASK (available seat-kilometers) brought traffic back to pre-COVID-19 levels, which supports our assumption for full-year 2023. The lifting of travel restrictions in China in mid-December 2022 played a significant role in the recovery, with CFM cycles also recovering to 2019 levels in North America, Europe, and China. However, the Asia-Pacific region, excluding China, is still at 80% of its 2019 level. Management remains vigilant on supply chain difficulties but reiterates its ability to offset inflation and meet its financial objectives for 2023. We maintain our fair value estimate of EUR 160.