Safran Considers Options for its Identity and Security Businesses

By Robert Wall

LONDON--French aerospace supplier Safran SA on Monday said it is reviewing the future of its identity and security businesses while proceeding with efforts to unload an airport explosives detection operation.

The review of what to do with its businesses that makes secure identity cards and operates in biometrics would take a maximum of six months, Chief Executive Philippe Petitcolin told reporters ahead of an investor briefing. Options range from retaining the activities to a sale.

The move comes as Safran focuses increasingly on its aerospace and defense activities, where it is a major supplier of everything from engines for Boeing Co. and Airbus Group SE planes to rockets. Safran had about EUR1.85 billion ($2 billion) in sales last year in its security businesses, Mr. Petitcolin said.

Safran is already in the process of trying to sell an explosive detection business it acquired in 2009 from General Electric Co. "We have never been able to find any kind of synergies with the rest of the security businesses," Mr. Petitcolin said. The unit had sales of around $350 million. Safran is talking with several potential buyers, the CEO said.

As part of its heightened focus on the aircraft and defense markets, Mr. Petitcolin said the company would consider adding to its aircraft equipment business. No particular target has been identified, he said, adding that any deal would only be done at the right price.

The company, which reiterated its guidance for 2016, also laid out financial objectives to 2020 and beyond. Free cash flow as a share of adjusted recurring operating income should average 50% through the end of the decade, higher than the 40% seen last year and expected in 2016. Profitability of the aircraft equipment business should rise.

In its key aircraft engine business, where Safran cooperates with General Electric to power Boeing and Airbus single-aisle planes, the operating margin should be in the mid-to-high teens, the French company said, even with the introduction of the new Leap engine. Aftermarket sales of commercial engines would bolster results, it said.

Safran said it planned to exit the transition period in 2020 with adjusted consolidated sales in excess of EUR21 billion, with an operating margin above 15%. Free cash should see "a very strong increase" over 2015, it said.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

March 14, 2016 04:10 ET (08:10 GMT)

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