incredible results at the cost of drastic austerity measures

incredible results at the cost of drastic austerity measures

incredible results at the cost of drastic austerity measures

Safran managed to remain profitable in 2020, publishing a net profit of 352 million euros on Thursday, despite the historic crisis in the aviation sector due to the Covid-19 pandemic.

The engine and aeronautical equipment manufacturer saw its adjusted turnover contract by 33% over the year, to 16.5 billion euros, but maintained its profitability at the cost of drastic austerity measures, according to a press release.

Already affected by the setbacks of the Boeing 737 MAX, of which it produces all engines, Safran, like the entire aeronautics sector, “was faced with the biggest crisis in its history with a collapse in air traffic due to lockdowns and travel restrictions imposed in all regions of the world, “he recalls.

Lower production rates

The drop in turnover is due in particular to the reductions in production rates adopted by aircraft manufacturers, of the order of 40% for Airbus, and the sluggishness of air traffic: planes flying less, companies need less spare parts and services, income-generating activities for Safran.

The group expects a complicated start to the year, noting a “recent slowdown in the resumption of air traffic in several regions of the world” due to the emergence of variants of the virus and the strengthening of health restriction measures international travel.

Cost reduction

However, the group generated a current operating profit of 1.69 billion euros in 2020 (-55.9%) and achieved its objectives for the year thanks to an operating margin of 10.2% and free cash flow. of 1.073 billion.

To achieve this, he cut costs. Four production sites were closed, subcontracting expenses and investment commitments cut, research and development expenses reduced by 35% in 2020.

Workforce reductions: French sites spared

Global membership has increased from 95,000 to 79,000. France, with 44,000 employees, was spared thanks to an activity adaptation plan including in particular a long-term partial activity device (APLD).

“Despite the uncertainties and the difficulties that persist, especially in the first half of 2021, I remain determined and optimistic,” however, says its managing director Olivier Andriès, quoted in the press release.

The group forecasts for 2021 an adjusted turnover down “from 2% to 4%” excluding currency and scope effects and expects a “stronger activity and profitability profile at the end of the year”.

Safran plans to pay a dividend in 2021, after canceling the payment of its 2019 dividend in April.

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