Safran sees limited impact from Russia sanctions

PARIS, July 31 Thu Jul 31, 2014 2:08am EDT

PARIS, July 31 (Reuters) - Safran expects some impact on its Sagem defence electronics business as a result of new European Union and U.S. sanctions on Russia, but this will not significantly affect the parent group, the head of the French aerospace company said on Thursday.

"Our defence activities are 10 percent of the group total, and Russia is not by any means the largest customer, so you are talking about something barely material at the Safran level," Jean-Paul Herteman told reporters on a conference call.

He declined to describe the Sagem technology that would be potentially affected, saying this was confidential.

Herteman also said Boeing had asked CFM, a joint venture between Safran and General Electric, to speed development of the LEAP-1B engine for its 737 MAX - one reason why Safran had upgraded its R&D and investment forecast for the year.

But this does not imply any change in the schedule for entry to service for the upgraded jet, he said. Boeing has said it plans to introduce the aircraft in 2017.

Safran is looking at spending more on strengthening its supply chain but does not intend to buy companies outright, Finance Director Ross McInnes said after the company reported first-half earnings.

Both executives said Safran is confident it can catch up with its full-year targets after a drop in growth in the civil aftermarket in the second quarter, which they blamed on an unfavourable comparison with the same period last year. (Reporting by Tim Hepher; Editing by James Regan)