SAFRAN strives to keep civilians and military personnel safe in the air and on land. The company has returned to its aerospace roots while building up its defense and security segments. It restructured its operations to three divisions: Aerospace manufactures aircraft/rocket/space engines and propulsion systems for fixed wing, as well as rotorcraft; Defense develops and builds navigation systems, drones, and optronics; and Security offers biometric identification and access control systems. SAFRAN's segments serve both the civilian and military sectors, working alone or in partnership with other major companies. SAFRAN is a product of the Sagem and Snecma merger.
Reporting its results in four segments, Safran split its Aerospace division into two segments, Aerospace Propulsion and Aircraft Equipment. The largest of SAFRAN's segments is Aerospace Propulsion, which accounts for more than half of overall sales. The segment's operations include an alliance with General Electric through CFM International, a 50/50 joint venture contracted through 2040. CFM develops and markets the CFM56 turbofan engine for single-aisle commercial jets. In the military sector, Aerospace Propulsion makes engines for combat, training, and transport aircraft. The segment also has made more than 50,000 helicopter turbine engines for some 2,200 customers in about 150 countries.
The Aircraft Equipment segment accounts for 26% of sales. The segment supplies engine nacelles and thrust reversers for the Airbus A380. It also provides landing systems for the A380 and the Airbus Military A400M, the Boeing 787 Dreamliner, and the Dassault Aviation Rafale. The segment's wheels and carbon brakes have been installed in more than 3,500 planes used by some 300 airlines.
Defense, 11% of sales, provides inertial navigation systems for use on military transport and combat aircraft, helicopters, warships, armored vehicles, and other systems. The segment also provides products for digital combat, including technology for vehicle digitization and encryption. Security, 11% of sales, offers multibiometric identification technologies that can identify persons through fingerprints, iris, face, and vein recognition. It also offers explosive detection systems and smart cards. The segment's systems have been implemented in more than 100 countries.
Safran's revenue increased 9% in 2011 compared with 2010 thanks in part to lower costs and more demand from OEM and aftermarket customers in the aerospace market. Adjusted net income was up 27%. By segment, revenue for Aerospace Propulsion rose 9% in 2011 compared with 2010 thanks in part to more demand for CFM and high-thrust engines and helicopter turbines from the civilian aftermarket. OEM customers also bought more CFM56 engines. Sales for Aircraft Equipment also went up 9% in 2011 vs. 2010 to meet more demand for nacelles, wheels, and brakes from OEMs and civil aerospace services.
Defense inched up 2% in 2011 compared with 2010. The segment enjoyed healthy demand for the Felin soldier integrated equipment suites from the French army and long-range infra-red goggles for export. Security surged about 20% over the same period. The segment did well with e-Documents in the Latin American telecommunications and banking markets and identification products in emerging countries.
The company's new Leading Edge Aviation Propulsion (LEAP) engine for single-aisle commercial jets, intended as a replacement of the best-selling CFM56 engine, received more than 3,000 orders from Airbus, Boeing, and the Commercial Aircraft Corp. of China (Comac) in 2011 that will bring even more revenue down line through maintenance. Also in 2011 CFM International, the Safran-GE joint venture, received 1,500 -- a record number -- orders for the CFM56, totaling about $52 billion, from civilian and military customers. These orders are also expected to bring more revenue in the future through orders for spare parts and other maintenance services. To meet the challenge of fulfilling demand for the LEAP, among other goals, Safran hired 6,000 new employees -- half of them in France -- in 2011 and stated plans to hire about as many in 2012.
In 2011 SAFRAN wrapped up its acquisition of US-based L-1 Identity Solutions for more than $1 billion and changed the company's name to MorphoTrust USA. The operating and holding company of MorphoTrust, which specializes in biometrics and ID management, joined SAFRAN's MorphoTrak security business. The deal positioned SAFRAN as the world's leader in providing biometric identity systems and services. (MorphoTrust's intelligence services group was picked up earlier by BAE SYSTEMS plc.) In 2009 SAFRAN acquired Motorola's biometric operations; the deal included Motorola's Printrak fingerprint identification system. Subsequently Printrak and Sagem Sécurité's subsidiary Sagem Morpho were united as MorphoTrak. The business offers biometric and identification management products and services to federal, state, and local governments, and commercial markets.
The Aerospace Propulsion segment expanded in spring 2011 when SAFRAN acquired the propellants and explosives arm of SNPE, SNPE Materiaux Energentiques (SME). The deal pockets SME, its subsidiaries, and a 50% stake in Roxel, a maker of solid rocket motors, and 40% stake in Regulus, a maker of space launcher propellants. In 2012 SME's operations were merged with Snecma Propulsion Solide (a solid propellant rocket engine business of the Aerospace segment), to form a new subsidiary called Herakles, one of the world's leading solid rocket propulsion providers.
The French government is SAFRAN's largest shareholder, with a 30% stake. – less