PARIS (Reuters) - French aerospace supplier Safran halved its core profit in the first half of the year as the COVID-19 crisis gutted demand for passenger jets.
The engine maker posted a recurring operating profit of 947 million euros ($1.1 billion), down 49.7%, as revenues fell 28% to 8.767 billion. Analysts had expected operating profit of 840 million euros on revenues of 8.5 billion, according to Refinitiv data.
Safran said it expected a 35% drop in revenue and an operating margin of around 10% for the full year, and positive free cashflow in the second half.
In the first half, the margin slid to 10.8% from 15.6% a year earlier when aerospace firms were enjoying record output.
Safran co-produces engines for the grounded Boeing 737 MAX and around half of Airbus’s competing A320neo fleet.
Air travel has collapsed since the pandemic spread widely in March, depriving Safran and other contractors of revenues from the sale of new equipment as well as maintenance and spare parts that depend heavily on the number of hours jets spend flying.
Civil aftermarket revenues fell 34.4% in dollar terms and Safran said it expected these to fall 50% for the full year.
It predicted 800 LEAP engine deliveries in 2020.
Safran said it had signed a deal with unions in France capping pay and profit-sharing and targeting 3,000 early retirements by offering incentives. The deal will help improve Safran’s finances from the second half, added the company.
($1 = 0.8490 euros)
Reporting by Tim Hepher; Editing by Sudip Kar-Gupta
Our Standards: The Thomson Reuters Trust Principles.