France's Defence and Technology Group Thales Q-1 Sales Rise 1.9% and Company Keeps Its Forecasts

The French group said quarterly revenues rose 1.9% on a like-for-like basis to 3.917 billion euros ($4.70 billion), led by demand for military radars

Thales Group | Electronic2B

The intake of new orders jumped 31% to 3.416 billion euros on the back of French Rafale sales to Greece and France, for which Thales makes radars, and a Franco-Italian air defence system, as well as a broadband satellite for Indonesia.

French defence and technology group Thales posted higher than expected first-quarter revenues and orders as it returned to growth in the wake of the coronavirus crisis.

The French group said quarterly revenues rose 1.9% on a like-for-like basis to 3.917 billion euros ($4.70 billion), led by demand for military radars and cybersecurity and offsetting lower civil aerospace activity heavily impacted by the pandemic.

The intake of new orders jumped 31% to 3.416 billion euros on the back of French Rafale sales to Greece and France, for which Thales makes radars, and a Franco-Italian air defence system, as well as a broadband satellite for Indonesia.

Thales confirmed full-year forecasts that include sales of 17.1-17.9 billion euros and new orders outpacing revenues.

Thales declined to comment on the fate of its rail signalling business after Reuters last month reported the company was looking for buyers in a potential deal worth at least 1.5 billion euros, as Thales streamlines operations.

"We never comment on this type of rumour," Chief Financial Officer Pascal Bouchiat told reporters.

He noted that Thales is in the middle of a routine annual review of its strategy, but gave no further details.

Thales has in the past defended a diversified model spread between aerospace, defence, transport and security technology, arguing this has stood it well during the COVID-19 crisis.

The transport unit, the smallest of Thales' four main divisions, saw revenues rise 0.5% in the first quarter to 344 million euros as new orders rose 67% to 259 million.

Analysts were on average expecting total revenues of 3.762 billion euros and orders of 3.129 billion in the first quarter, according to a company-compiled consensus forecast.

Bouchiat said Thales had seen no significant impact from a global shortage of semiconductors used by its identity and bank payments businesses, but was taking steps to add new suppliers.

While it does so, the impact may rise in the short term.

"Overall the situation is well under control, perhaps with a slightly stronger impact in the second quarter," Bouchiat said.

"The market is very tight and production capacity is saturated ... with lead times rising by 12 months," he added.

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