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Jet engine maker Safran raises dividend on profit jump and growth outlook

PARIS (Reuters) -French jet engine maker Safran posted sharply higher revenue and operating profit for 2023, raised its dividend and predicted further growth this year on the back of strong demand for engine services.

Shares in the company rose sharply in early Paris trade and were up 4.3% by 0833 GMT.

Full-year recurring operating income rose 31% to 3.166 billion euros ($3.4 billion) as revenue rose 22% to 23.199 billion, the company said, while its widely watched civil aftermarket revenue rose 33% in dollar terms.

The company also said it would raise its dividend to 2.20 euros a share, which analysts from Equity Research said was above market expectations of around 2.10 euros.

Safran co-produces the LEAP jet engine with GE Aerospace for all Boeing 737 MAX jets and about half of the A320neo jets sold by Airbus, where its CFM joint venture competes for engine sales with Pratt & Whitney.

Key Safran client Airbus also released full-year figures on Thursday, announcing a special dividend after record orders, boosting its core operating profit by 4%.

Safran Chief Executive Oivier Andries told reporters that restrictions by the U.S. aviation regulator on Boeing’s growth plans for 737 production – resulting from flaws in the manufacturing of a door plug that blew off a jet last month – could affect deliveries of LEAP-1B engines but it was too early to quantify this.

Andries ruled out a switch in production from the Boeing version of the LEAP to the Airbus version, known as LEAP-1A, in 2024 or the short term and said Airbus had not asked for this. He did not, however, rule out CFM studying the relative capacity requirements of the two versions for 2025 and beyond.

He also said he expected Boeing to wait until the results of an FAA audit of its factories before making any decisions on supplier production rates.

LEAP deliveries grew 38% in 2023, slightly below target, Safran reported.

The CEO also told reporters that Safran is in talks with the Italian government over Rome’s recent decision to block part of its planned $1.8 billion purchase of the flight control systems business of Collins Aerospace

Prime Minister Giorgia Meloni vetoed the acquisition of Collins’ Italian subsidiary Microtecnica under special “golden power” rules last November, citing national security concerns.

Both Safran and Collins lodged protests in Italy in January, Andries said, adding that dialogue was the preferred solution.

($1 = 0.9321 euros)

(Reporting by Tim HepherAdditional reporting by Tassilo HummelEditing by David Goodman)

 

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