PARIS — Thales reported Tuesday a 2016 record high of 9 percent of core earnings in relation to sales, with company Chairman and CEO Patrice Caine noting that many European nations have reset defense budgets toward growth after a spell of slack spending.

"European countries lowered their guard," Caine told journalists. That slowdown in mature military markets has changed, "with many nations' declaration they will re-invest in their defense budgets," he added.

Thales reported a 15 percent rise in earnings before interest and taxes from the previous year, to €1.35 billion (U.S. $1.43 billion) on a like-for-like basis, hitting a high of 9.1 percent of annual sales.

The electronics specialist will likely benefit from a pledge by U.S. President Donald Trump to boost 2018 defense spending by $54 billion, a financial analyst said.

"Even if Thales is not a large-scale supplier in the U.S. defense market, Trump's speech will have a ripple effect," said Antoine Boivin-Champeaux, an analyst at brokerage Natixis.

An increase in military spending has the potential to change the tone in the defense market.

Sales rose 6.8 percent to €14.89 billion, while orders fell 11 percent to €16.51 billion, Thales said. That decline in orders reflected the spike up to an exceptional €18.88 billion in 2015, boosted by the sale of the Dassault Rafale to Egypt and Qatar.

Thales booked its share of the Indian order for 36 Rafales in the third quarter, one of the company's 14 large orders worth more than €100 million awarded last year.

"What's new is mature markets," with sales growth in 2016 after a stable 2015, said Pascal Bouchiat, Thales' chief finance officer. Sales in mature markets rose 3.9 percent last year after 0.5 percent growth in 2015.

Sales in emerging markets rose 14 percent, compared to 16 percent. Emerging markets accounted for 30 percent of total sales, up from 28 percent.

A "modest" recovery in DCNS' financial performance contributed to the growth in earnings, and Thales was pleased with that commitment to shareholders, Bouchiat said.

DCNS "is on the right track," Caine said, adding that Thales is working with the naval specialist on the France team in the Australian submarine program. "Our destiny is closely linked," he said.

Thales holds 35 percent of the French naval shipbuilder.

Sales in the defense and security sector rose 4.3 percent to €7.38 billion, while core earnings from that segment climbed 10.7 percent to €788 million. Orders slipped 6 percent to €9.05 billion. Adjusted net profit rose 11 percent to €897 million. 

Defense and civil sales are split around 50-50, Caine said.

On the European military helicopter business, the NH90 transport and Tiger attack rotorcraft are closer to the end of their programs than the start, he said. There is a "satisfactory" outlook for its missiles business, with development in Belfast, Northern Ireland, of the lightweight multirole missile for helicopters and drones, and export sale of the Starstreak weapon in Asia, he said.

On the 2017 outlook, Thales expects orders of some €14 billion, with sales growth of around 5 percent, and core earnings between €1.48 billion and €1.5 billion, or a rise of 9 to 11 percent.

The company does not expect to win a "jumbo" deal worth more than €500 million this year, Caine said.

The United Arab Emirates is seen as a prospective client for the Rafale, with Abu Dhabi having previously considered an order for 60 units.

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