April 25, 2018 / 5:21 PM / in a year

Safran says higher first-quarter revenue bolsters full-year targets

PARIS (Reuters) - Safran (SAF.PA) said on Wednesday it expected to reach the high end of its full-year targets after posting a 12 percent rise in first-quarter revenues, and said it had not discovered any surprises since taking over Zodiac Aerospace in March.

FILE PHOTO: The logo of Safran Group is seen on the company's headquarters building in Toulouse, Southwestern France, April 18, 2017. REUTERS/Regis Duvignau

No news on Paris-based Zodiac is generally seen as good news, following production upheavals and repeated profit warnings that resulted in the company bowing to Safran’s long-held takeover ambitions last year.

But Safran said it would not be able to incorporate Zodiac, whose turnaround remains under close watch after a series of delivery delays, into its full-year forecasts until it reports mid-year earnings in September.

“Overall, the state of the company matches what we expected,” Safran Chief Executive Philippe Petitcolin said. “We are in the middle of working on it; there is no scoop in either direction on the state of the company as we found it.”

Safran said revenue reached 4.222 billion euros in the first quarter including a one-month contribution from Zodiac, whose revenues fell in March compared with a year earlier.

Revenues in the main aerospace propulsion division grew 4.6 percent, or 12.1 percent on an organic basis.

Safran said it expected full-year underlying revenue excluding Zodiac to post growth at the top end of a previously announced range of 2 to 4 percent. Growth in operating income should hit the upper end of a 7 to 10 percent band.

Safran said it was in contact with Textron’s Cessna unit after the only other customer for its Silvercrest engine, Dassault Aviation, scrapped its Falcon 5X due to engine delays.

Textron Chief Executive Scott Donnelly told analysts last week that Cessna was suspending work on its Hemisphere business jet until more was known about the future of the delayed engine.

“And then based on that, we’ll make our decisions and move forward knowing what the performance of the engine is,” he said.

Petitcolin said the discussions involved tailoring the engine to Cessna’s jet.

“There is nothing new. Cessna wants an engine that is optimised for its programme. They are waiting for us to define with them an optimal engine to work with,” Petitcolin said.

Meanwhile, the commercial helicopter market is emerging from a long slump, pushing up demand for helicopter engines. Safran aims to produce 50 to 100 more such engines this year, Petitcolin said.

He struck a cautious note, however, on calls for further increases in Airbus jet production, requiring more of the new LEAP engines co-produced with General Electric (GE.N). The manufacturers are handling a sharp ramp-up in production and have run into some delays and glitches from suppliers.

Airbus said earlier it was increasing production of its A320neo family, about half of which are powered by LEAP engines, to 63 jets a month in 2019, up from a previous goal of 60 a month. It currently produces some 55 of the jets a month.

“As of today, we are not in a position to commit ourselves to higher volumes,” Petitcolin said .

Reporting by Tim Hepher, Cyril Altmeyer; editing by Larry King

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