Safran has confirmed its outlook for 2016 and has identified trends and objectives for the following years. The announcement was made on 14th March at Safran’s Capital Markets Day event in London for investors and financial analysts.
The period between 2016 and 2020 will be marked by the renewal of the group's flagship product with the transition from the CFM56 engine family to the LEAP. The overall margin for this segment is expected to remain in the mid to high teens, thanks to civil aftermarket activity.
Safran is predicting an improvement of about one point per year in the operational performance of the Aircraft Equipment, Defense and Security activities over this period.
During the transition period, the group margin (adjusted recurring operating income as a percentage of adjusted sales) is expected to remain consistent with the record set in 2015. Average free cash flow for the period is targeted at 50% of adjusted recurring operating income.
Safran has three main objectives for 2020, exiting this transition period: adjusted consolidated sales in excess of €21bn; adjusted recurring operating margin trending above 15% ; and a very strong increase in free cash flow compared with 2015.
The CFM partnership is seen as the primary growth driver in the commercial engine business in the coming decades. Safran says that opportunities for collaboration could be considered outside the scope of CFM, concerning helicopters, military engines, business and regional aviation, to support the development of these business lines.
The company confirms that divestment of its detection business is under way, along with a review of strategic options to ensure the development of the identity and security businesses.