Safran Sa Unspon/ Adr

Welcome to the Saffron Third Quarter 2026 Revenue. At this time, I would like to turn the conference over to your hosts, Olivier Andries, Saffron's CEO, and Pascal Bantegnie, Group CFO. Mr. Andries, please go ahead.

Good morning, everyone, and thank you for being with us today. I am here with Pascal. As you know, we are operating in a complex market environment with air traffic growth softening, particularly in the widebody segment. Narrowbody was up 1.8% over 9 months, measured in ASKs . Airlines continued to rely on the fleet powered by CFM56 engines. Retirements remained low. and the aircraft storage range remains stable at 7.3 in Q3, below its 2025 level. This continued fleet activity supports demand for spare parts and services. Against this backdrop, Safran once again delivered a robust Q3 with revenue of 9 billion euros up 15% on a reported basis. Over nine months, revenue amounted to 26.6 billion euros, up 17% on a reported basis. Aftermarket continues to show a solid trend. For civil engines, spare parts sales in dollars show no sign of deceleration, as they increased by 17% in Q3, with activity above Q1 and Q2 levels, and by 24% over nine months. Services grew by 19% in Q3, and by 32% over nine months, driven by LEAP RPFH contracts. Turning to LEAP OE. We delivered 535 engines in Q3, up 5% year-on-year, with a higher mix of installed engines. This brings deliveries to 1565 engines over 9 months, up 26%, reflecting solid progress in our production ramp-up and parts availability. Momentum in defense remains strong, particularly in Europe, boosting defense electronic sales in Q3. More broadly, to meet demand from our defense customers for the Hammer guided bombs for navigation systems and missile seekers and deliver at a larger scale We are increasing investment in production capacity both in France and Germany. We are confirming the full year 2026 outlook that we raised in July. The priorities are very clear. Deliver on our commitments, support our customers' operations and build the industrial capabilities that are required for accelerated growth in both civil and defense activities. Turning to slide four, CFM has signed an MOU with Turkish Airlines for more than 300 LEAP-1B engines. It also covers long-term services for its full fleet of LEAP-1B engines and a material service agreement for its future maintenance, repair, and overall facility. This further develops CFM's open MRO ecosystem to support the growing LEAP fleet. In avionics, Airbus has selected our Skynote inertial navigation system for the A220, marking our entry into commercial aviation. Already selected on military aircraft, helicopters and UAVs, Skynote maintains precise navigation when satellite signals are unavailable, jammed, or spoofed. This selection demonstrates the value of our dual-use technologies in addressing the growing disruption of satellite navigation in civil aviation and opens a significantly new market for Skynote. It also breaks A decades-long monopoly in commercial navigation systems. In Texas, we are doubling our missile turbojet production capacity with a new TR-40 assembly line coming on stream in 2028. Demand for this engine family, which powers notably the naval strike missile for the US Navy, has quadrupled. In recent years, this investment strengthens our U.S. defense presence and positions us to support further growth and new applications. On October 6, our joint venture Ariane Group supported the first successful submarine launch of the M51.3 ballistic missile. This acceptance test validated the submarine and crew's ability to launch it under operational conditions, illustrating our joint venture's role in France's deterrence capability. On civil activities, Amazon selected Ariane Space for six additional launches of Ariane 6, bringing the total number of ordered launches to 24. So far, In 2026, 100 Amazon LEO satellites have been placed into orbit on three Ariane 6 missions in less than five months. Pascal will now take you through the financial performance in more detail. Pascal, the floor is yours.

Thank you, Olivier. Good morning, everyone. Let's begin with Current CFX. You can follow along on slide six. At the end of September, our hedge book stood at $61.1 billion, which is almost unchanged from the $59.5 billion at the end of June. Currency markets are still quite sensitive to changes in monetary policy and developments in the Middle East conflict. We saw the US dollar weaken a bit over the summer, but it strengthened again in September, with the euro-dollar rate dropping below 1.14 by the end of the month, and since then the dollar has continued to gain ground and we are now close to 1.12 as we speak. We are making the most of this situation to reinforce our edge book and just to be clear, there is no change in our targeted edge rates for the coming years. Now if we look to our revenue bridge on slide seven, we can see that organic growth reached 13.4% in the third quarter. On top of that, currency effects contributed an additional 1.1 percentage points with the euro-dollar rate averaging 1.15 this quarter compared to 1.17 in Q3 last year. In terms of scope changes, the impact was more or less neutral. That's because the one month of contribution from the actuation and flight control business was balanced out by the sale of SPI, Safran Passenger Innovation. All in all, our revenue for Q3 2026 came in at 9 billion euros, which represents a 14.7% increase on a reported basis. Let's now dive into the details of organic growth by activity as shown on slide eight. Starting with propulsion, revenue reached 4.6 billion euros, up 13% organically. For civil engines, we delivered 535 lead engines this quarter, which is a 5% increase both year over year and sequentially. So we are right on track to meet our full year target. Spare part sales grew by 17% in dollar terms, with both CFM56 and LEED contributing, notably thanks to favorable pricing. We are seeing CFM56 World Scope Stabilizing quarter on quarter, and an up compared to Q3 last year, as parts availability began to improve from Q3 25 onwards. LEAP also drove spare parts growth, supported by more third-party show visits, an expanding world scope, and better pricing. Services for civil engines grew strongly, 19% in dollars, driven by the ramp-up of LEAP RPSH contracts. On the military side, engine revenue was down this quarter due to the schedule of Rafale deliveries to end customers. Moving now to equipment and defense, revenues stood at 3.6 billion euros, up 16% organically. OE sales climbed 16%. In defense, the momentum was particularly strong, thanks to a robust demand for our guided bomb hammer, optronics, inertial navigation, and missile secures, showcasing the breadth of our defense portfolio. On the equipment side, we continued to ramp up across all platforms, particularly with electrical systems for both Airbus and Boeing, power distribution for the 787, A350, and nacelles for the A320neo. Services revenues in this segment grew by 15%, mainly driven by the A320neo nacelle and actuation activities. Lastly, looking at aircraft interiors, revenue was 751 million euros, up 6% organically. In seats, We saw growth in both services and business class OE, boosted by higher volumes and improved pricing. The market for seats still exceeds available supply, which puts us in a strong position to negotiate favorable terms. In the cabin business, there was some impact from transferring Safran ventilation system over to equipment and defense, but before the transfer, both OE and services showed good momentum, especially in the aftermarket, where we had notable growth in the Middle East, Europe and the Americas. In this positive context for Safran Cabin, we launched the process to divest our cabin business a few weeks ago. For your reference, Cabin now generates around 2 billion euros in revenue per year and is delivering positive edits and free cash flow. Now turning to slide 9, I want to update you on our share buyback program. We are continuing to deliver on our 5 billion euros commitment. In fact, we just completed a new tranche of 375 million euros. Altogether, as of today, Safran holds 4 million shares, which is about 1% of our capital share, which are set to be canceled by year end. On the regulatory side, you may have seen that the 2027 French draft finance deal is proposing to extend The corporate surtax into 2027, though at a lower rate of 31.4% compared to 41.2% in 2026. If this is adopted as currently proposed, we estimate it could meet a cash outflow of around 400 million euros for SAFCO in 2027, or as much as 500 million euros plus if the current rate is maintained. Of course, these figures are still subject to the final legislation. I'd also like to mention some positive news on our credit rating. Early September, SNPs upgraded Safran's long-term issuer credit rating and senior unsecured debt rating to A, with a stable outlook, up from A- with a positive outlook. This upgrade is a strong recognition of Safran's financial strength. And finally, a quick note for your calendars. We'll be holding an IFRS 18 workshop on December 3, where we will walk you through how the standard will be applied in our financial statements and explain any adjustments to our reporting for 2027. That said, we do not anticipate any significant change to our bottom line. Back to you, Olivier.