February 27, 2020 / 6:05 AM / a month ago

France's Safran braces for 737 MAX fallout after beating 2019 forecasts

PARIS, Feb 27 (Reuters) - France’s Safran posted a faster-than-expected rise in 2019 core profit led by jet engine spare parts, but warned of flat-to-lower 2020 revenues as it counts the cost of Boeing’s 737 MAX grounding crisis.

Safran, which is the world’s second-largest aerospace supplier, said operating profit rose 24.6% on a like-for-like basis to 3.82 billion euros ($4.15 billion) while revenues rose by an underlying 9.3% to 24.64 billion.

Analysts on average expected 2019 operating income of 3.75 billion euros on revenues of 24.484 billion, according to Refinitv data.

The Boeing 737 MAX crisis dominated a mixed outlook for 2020, with Safran predicting a fall of up to 5% in revenues even as operating income grows around 5%. Safran also said its medium term objectives would be reviewed after the MAX returns to service, which it expects in the middle of the year.

Safran co-produces LEAP engines for the MAX and some Airbus jets with General Electric through CFM International.

It assumed CFM would produce 1,400 LEAP engines in 2020, down from a roughly comparable 1,736 deliveries in 2019.

$1 = 0.9201 euros Reporting by Tim Hepher; Editing by Sudip Kar-Gupta

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