Updated Version 2 - Update 1 - Safran Group's sales increase, but concerns in the aftermarket drag down stock price

Updated share price performance and background information

Florence Loeve/Joanna Plucinska

Reuters Paris/London, October 23 - French jet engine manufacturer Safran (SAF.PA) reported an increase in third-quarter revenue on Friday, mainly due to growth in its core engine business, and reaffirmed its outlook for 2026 results.

However, the stock fell 6% in early trading as investors worried that growth in aftermarket sales may continue to slow into 2027, as airlines cut capacity due to high fuel prices.

As one of the world’s largest aerospace suppliers, Safran said quarterly sales rose 13.4% organically to 9 billion euros ($10.1 billion), in line with the average forecast compiled by analysts for the company.

After reporting first-half profits above expectations, Safran upgraded its full-year target in July (link), thanks to strong growth in demand for spare parts.

Aftermarket outlook

Safran's propulsion systems division—which will account for about half of group revenue in 2025—achieved organic sales growth of 13.2% this quarter, with aftermarket revenue rising by 18.7%.

Analysts at Jefferies noted that growth in the propulsion systems aftermarket has slowed and fell short of expectations.

CEO Olivier Andries dismissed concerns about weakening demand for spare parts.

"We're still growing," he told reporters during a media conference call, adding that full-year spare parts sales are expected to rise about 25% year-on-year.

Analysts remain optimistic about the strong long-term growth of the aftermarket, with JPMorgan forecasting sales will increase sixfold between 2024 and 2040.

U.S. engine maker GE Aerospace on Tuesday (link) raised its 2026 profit outlook for the second time this year, citing strong demand for engine maintenance and spare parts.

Safran’s equipment and defense division posted quarterly revenue of 3.6 billion euros, ahead of analyst expectations of 3.5 billion euros.

Growth in defense business

Andries said defense demand is booming, and Safran expects revenue in this sector to double between 2025 and 2030.

"We expect annual growth of 20%, which is very significant," he told reporters.

He added that Safran is opening a missile engine assembly line in Texas, with output expected to double.

Andries also said that work previously carried out under the now-cancelled FCAS fighter jet project will be shifted to the French "Future Combat Aircraft" (FCAS) program.

(1 dollar = 0.8921 euros)

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