France’s Safran posted a stronger-than-expected 20 percent leap in 2010 core profits as its jet engine business reinforced signs of economic recovery in the fourth quarter, while aiming to repeat that growth in 2011.
Safran, which makes aero engines, infra-red goggles and biometric equipment, also delivered further evidence of rapid growth in the security markets driven by global uncertainty.
The state-controlled manufacturer said net profits grew 29 percent to 508 million euros in 2010. Recurring operating income grew 20 percent to 878 million euros on sales up 3 percent to 10.76 billion euros. Like-for-like sales eased 1 percent, Reuters reports.
For 2011, Safran said it expected to raise revenue by at least 5 percent and recurring profit by at least 20 percent.
Strong demand for military spares offset slack revenues and deliveries at the core aerospace propulsion division, though Safran joined other major French companies this week in reporting a pick-up in activity in the fourth quarter.
Chief Executive Jean-Paul Herteman said that in late 2010, Safran had seen the first signs of a recovery in the crucial “after-market” that includes spares for the CFM56, the world’s best-selling jet engine co-built with General Electric.
The after-market for spares and support is an indicator of health in the economy since it is related to the trips flown by aircaft, which in turn reflect the movement of people and goods.
The recurring operating margin exceeded Safran’s 8 percent target level to reach 8.2 percent in 2010, up from a restated level of 7 percent a year earlier, the company said on Thursday.
Safran said it was on the way to a double-digit recurring operating margin “as early as 2012” and raised its annual dividend to 50 euro cents a share from 38 cents a year ago.
Analysts were on average expecting 2010 net profit of 498 million euros and operating profit of 849 million on revenues of 10.689 billion, according to Thomson Reuters I/B/E/S data.
Safran, which backed away from efforts to buy French aero equipment supplier Zodiac for some 3 billion euros in December, ended the year with 24 million euros in net cash.
Herteman said without elaborating in a statement that this positive cash position gave Safran “strategic capability”.
The turnaround from net debt of 498 million euros a year earlier came in part from a French stimulus package and also an unspecified “commercial settlement” with planemakers.