PARIS (Reuters) – French aerospace group Safran warned of “significant impacts” from the war in Ukraine and from rising inflation, but confirmed full-year forecasts as it reported 22% growth in first-quarter revenue.
The maker of jet engines and landing gear said quarterly adjusted sales rose 17% on a like-for-like basis to 4.071 billion euros ($4.3 billion).
“We are taking vigorous steps to offset fully the margin impact of the Russia-Ukraine conflict and inflation, notably with additional savings,” Chief Executive Olivier Andries said.
Together with General Electric, Safran co-produces the world’s most sold jet engines for Boeing and Airbus medium-haul airliners through their CFM venture.
The widely watched civil aftermarket, depressed during the COVID pandemic, rose 52.9% in dollar terms in the first quarter, contributing to an 18.8% increase in total propulsion revenues.
Safran had been active in Russia where it supplies engines for the Superjet regional plane and Kamov helicopters, while also providing services for some 500 CFM-powered jetliners.
It has suspended exports and services under European Union sanctions imposed after Russia’s invasion of Ukraine. Its ArianeGroup rocket venture with Airbus has suspended using Soyouz launches.
Safran also relies on Russia for 50% of its needs of titanium, used in engine parts and landing gear.
It said its 2022 needs were covered and it was securing alternatives.
Inflationary pressure on raw materials linked to the crisis and extra freight spending will add costs equivalent to 0.8 percentage points of its profit margin, Safran said.
The group announced “vigorous cost savings” to offset a total headwind equivalent to 1.5% of its 2022 recurring margin but confirmed full-year forecasts. ($1 = 0.9511 euros)
(Reporting by Tim Hepher; Editing by Sudip Kar-Gupta)