PARIS, April 26 (Reuters) - France’s Safran said underlying revenues grew 12.6 percent in the first quarter as demand for civil aircraft engines, nacelles and military optronics pushed it ahead of the growth needed to meet a steady annual target of 5 percent.
Total first-quarter revenues rose to 5.781 billion euros ($6.4 billion) due in part to the acquisitions of Zodiac Aerospace and electromechanical systems of Collins Aerospace.
Safran, which co-produces engines for Boeing’s recently grounded 737 MAX together General Electric through the CFM International venture, said it continued to build the LEAP engines at the same speed but would cut output if needed.
Boeing earlier this month cut production of the 737 MAX to 42 aircraft from 52 per month following a decision by global regulators to ground the MAX in the wake of two crashes.
“Safran will adjust its production plan if necessary,” the French company said in a statement.
By keeping its production running at the full rate for now, CFM has been able to whittle down delays in delivering LEAP engines to Boeing and Airbus. It now expects to be back on schedule by end-April instead of May, industry sources say.
Safran had predicted a 50-100 million euro drop in 2019 propulsion profit due to losses on early LEAPs and lower output of their profitable predecessor, CFM56. It said these assumptions would be adjusted as the MAX crisis unfolds.
First-quarter sales included like-for-like growth of 13.3 percent in Aerosystems and Aircraft Interiors, which includes activities acquired through the purchase of Zodiac Aerospace last year. These count in Safran’s earnings from March 2018.
But Safran warned this rate of growth was “not fully representative” of the annual trend.
It reiterated that its ‘Aircraft Interiors’ unit would be in a transition year as it recovers from a three-year spate of production problems before the takeover.
Even so, its ‘Seats’ division resumed like-for-like growth in the first quarter driven by a recovery in sales of business-class pews.
The widely watched civil aftermarket grew 10.2 percent in dollar terms in the first quarter, Safran said. The company is targeting 2019 growth in the high single digits, or 7-9 percent.
$1 = 0.8982 euros Reporting by Tim Hepher; Editing by Sudip Kar-Gupta