27-Apr-2016 12:17 PM
Safran confirms full year 2016 outlook
Safran confirmed (26-Apr-2016) its 2016 full year outlook. The outlook includes Morpho Detection, the sale of which is expected to be completed in early 2017. The outlook does not take into account the impact in 2016 of the finalisation of the regrouping of its space launcher activities with those of Airbus Group in the Airbus Safran Launchers (ASL) JV. Safran expects the contribution of its space launchers activities to ASL to be accretive to adjusted recurring operating margin.
2016 full year outlook:
- Adjusted revenue to increase by a percentage rate in the low single digits (at an estimated average rate of USD1.11 to the Euro);
- Adjusted recurring operating income likely to increase by around 5% with a further increase in margin rate compared to 2015 (at a hedged rate of USD1.24 to the Euro);
- Free cash flow representing more than 40% of adjusted recurring operating income, an element of uncertainty being the rhythm of payments by state clients;
Full-year 2016 outlook is based on the following underlying assumptions:
- Healthy increase in aerospace original equipment deliveries;
- Civil aftermarket growth by a percentage in the high single digits;
- Start-up costs of series LEAP engine production;
- Reduction of self-funded R&D of the order of EUR100 to EUR150 million with a greater drop in capitalised amounts as spending declines on LEAP, A350, and helicopter turbines as they come closer to certification and entry into service. As a result of decreasing capitalisation and increasing amortisation of R&D costs, expensed R&D is expected to rise by around EUR100 million;
- Sustained level of tangible capital expenditure, including expansions, new production capacity and tooling, around EUR850 million, as required by production transitioning and ramp-up;
- Profitable growth for the Security business;
- Continued benefits from productivity improvement.