PARIS — French electronics company Thales reported a 2018 first-half operating profit of €762 million (U.S. $886 million), hitting a target of double digits as a percentage of sales.
“The operating margin rose sharply, breaking through the 10 percent barrier in (first half) for the first time,” Patrice Caine, chairman and CEO of Thales, said in a statement.
The company posted an operating profit of €762 million, marking 10.2 percent of sales of €7.45 billion, up 4.7 percent from €7.12 billion.
That operating profit was a 30 percent gain from €587 million a year ago, based on restating the year-ago figures to meet reporting changes.
The company had shown “a very solid performance,” he said. All the divisions showed “a sharp increase” in operating profit margins and had boosted spending on research and development, up 14 percent from a year ago on a like-for-like basis (or the adjusted measure of the growth).
Net attributable profit rose 39 percent to €539 million.
The company forecast weaker sales growth for its defense and security division in the second half of the year, compared to the same period a year ago, which racked up a rise of 11.8 percent.
Defense and security sales in the first half of 2018 rose 6.3 percent to €3.8 billion on a restated basis, reflecting large increases in defense spending in Western economies, with the “mature markets” showing a 10 percent rise.
The resolution of two unspecified trade disputes boosted operating profit for defense and security, allowing the company to write back €20 million of provisions, the company said. That recovery of provisions largely offset a big increase in R&D spending.
Operating profit for defense and security rose 11.8 percent to €444 million.
An overall orders boost came from deals for surface radar, systems for combat aircraft, warships and submarines, military radios, and cybersecurity, the company said.
Orders rose 5 percent to €6.3 billion, meeting the company’s expectations.
Thales booked a total €1.8 billion from six large orders, fewer than the eight received a year ago. One of the orders is worth more than €100 million.
Those large deals included onboard systems for Qatar’s order for 12 more Rafale fighter jets, a combat management system for five K130 corvettes for the German Navy and an upgrade of sonars for six Collins-class submarines for the Australian Navy, the company said.
Orders from emerging markets slipped 19 percent to €1.3 billion, reflecting one big deal this year compared to three deals a year ago.
Orders in the defense and security division rose 13 percent to €3.4 billion.
The aerospace division posted a 10 percent fall in orders to €2 billion, reflecting lower orders for military avionics and in-flight entertainment, with the latter boosted a year ago by booking a large deal from a North American airline.
Thales forecast total orders of some €15.5 billion for 2018, with strong defense sales offsetting a weaker telecommunications satellite market.
A 35 percent stake in Naval Group contributed €38 million, up from €26 million.
The company forecast an operating profit margin of 11 to 11.5 percent of sales by 2021, helped by a competitiveness drive.
Dassault Aviation, with a 24.65 percent stake, is the largest private shareholder. France holds 25.71 percent.