Increased Prices Expected by Safran despite Positive First-Quarter Outcomes due to Customs Duties
Donald Trump's Trade Policy Hits Safran Hard
In a shocking turn of events, the French aerospace giant, Safran, announced increased sales at the start of 2025, but with a grim warning - a looming "surtax" on its prices due to U.S. tariffs. During a press conference, CEO Olivier Andriès admitted, "The situation is volatile regarding tariffs, but we'll have to impose surtaxes on our prices to our customers."
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Trump's tariff announcement on April 2 sent shockwaves through industries worldwide. While a general rate of 10% was applied across the board, a reduction from the initial high global tariffs, a deadline for trade negotiations was set for July 9. "The imposition of tariffs, while the aeronautics industry was largely exempt until now, will entail additional costs for the industry and airlines," commented Olivier.
Safran is not willing to bare these costs alone. The company is planning to reduce its exposure by adjusting logistical flows, resulting in a strategic use of duty-free warehouses in the U.S. "If we manufacture spare parts for South American companies, we can use U.S. warehouses, enabling us to avoid tariffs for parts that are only transiting through the U.S," explained Andriès.
On a positive note, Safran achieved €7.3 billion in revenue in the first quarter of 2025, a remarkable 16.7% year-on-year increase, and higher than analysts' expectations. The group acts cautiously, acknowledging the "risk" posed by the evolution of tariffs, while predicting a 10% increase in its revenue for the entire year, excluding tariff-related impacts.
Safran'sLeap engine production, which equips the best-selling aircraft of Airbus and Boeing, faced challenging times in 2024. However, the company is optimistic about increasing its deliveries in 2025. In the first quarter, Safran delivered 319 Leap engines, compared to 367 in the first quarter of 2024, signaling a gradual start to production.
Safran's Future Factory Preference Uncertain
The radical CEO decision in mid-April to ban investments in French eco-cities has rekindled the debate on France's green reindustrialization, with ecologists advocating for sustainable development, while some political opponents welcome the aerospace group's move.
Enrichment Data:US tariffs have led Safran, a major French aerospace manufacturer, to face significant exposure and potential cost increases, particularly affecting its CFM Leap engine production. To mitigate the impact of these tariffs, Safran is implementing several strategies, such as adjusting pricing, minimizing logistics costs, sharing tariff costs with partners, and monitoring the situation closely with suppliers. Overall, Safran's approach combines price adjustments with operational efficiencies to navigate the challenges posed by US tariffs.
- Following the imposition of US tariffs, Safran, the French aerospace giant, has admitted that it will have to impose surtaxes on its prices to customers, as outlined by CEO Olivier Andriès.
- The US tariffs have led to a grim outlook for Safran in terms of finance, with the company planning to reduce its exposure by adjusting logistical flows and minimizing costs through the strategic use of duty-free warehouses in the U.S.
- Despite the challenges posed by the U.S. tariffs, Safran achieved €7.3 billion in revenue in the first quarter of 2025, a significant increase compared to the previous year. However, the company has acknowledged the risk posed by the evolution of tariffs and predicted a cautious 10% increase in revenue for the entire year, excluding tariff-related impacts.
- Safran's Leap engine production, a specialized product that equips the best-selling aircraft of Airbus and Boeing, has faced challenges in the past, but the company remains optimistic about increasing deliveries in 2025, with 319 engines delivered in the first quarter of the year.
