Safran upgrades revenue and operating income outlooks for 2019, free cash flow affected by 737 MAX

Safran updated (05-Sep-2019) its outlook for 2019 to take into account "strong momentum in all activities" as well as the situation concerning the Boeing 737 MAX. Details include:

• Revenue outlook: Adjusted revenue is expected to grow by around 15% in 2019 compared with 2018 (up from the previous range of growth of 7% to 9%). This is based on an estimated average exchange spot rate of USD1.13 to EUR1 in 2019. On an organic basis, based on Safran's assumption of LEAP-1B deliveries to Boeing, adjusted revenue is expected to grow by around 10% (previously outlook was around 5%);
• Recurring operating income outlook: Expected to grow "comfortably" above 20% (previously outlook was for growth in the low teens), at a hedged exchange rate of USD1.18 to EUR1;
• Free cash flow outlook: Free cash flow is expected to be in the range 50% to 55% of adjusted recurring operating income (previously around 55%) as recurring operating income outlook is raised. This is based on an assumption of return to service for the 737 MAX in 4Q2019;
  • In case of the grounding of the 737 MAX is extended to the end of 2019, free cash flow to adjusted recurring operating income should be below 50%. The grounding's impact on Safran free cash flow and any extension in 2019 is a deferral in cash collection and should reverse in the following quarters. [more - original PR]