Defence Spending Boosts Performance Despite Space Losses
French defence and technology group Thales exceeded earnings expectations for 2024, driven by increased arms spending and recovering air traffic. Despite setbacks in its space business, the company forecast higher sales and profitability for 2025.
Operating income rose 5.7% on a like-for-like basis to €2.419 billion, while revenues grew by 8.3% to €20.577 billion. New orders also climbed by an underlying 6% to €25.289 billion, surpassing analysts’ estimates. Experts had predicted an operating profit of €2.351 billion, revenues of €20.138 billion, and order intake of €23.76 billion, according to a company-compiled consensus.
Rising Defence Demand Fuels Growth at Thales
Thales, Europe’s largest defence electronics firm, benefited from increasing global security concerns. The company noted that defence sales and profits grew by 13% last year, outpacing gains in aerospace and cybersecurity.
“Geopolitical instability is a constant, and to a great extent, it is driving defence investments,” said CEO Patrice Caine. He added that European defence capabilities depend on political commitments translating into firm orders.
While defence performed well, Thales’ aerospace earnings declined by 13.9%, with research and restructuring costs weighing down its space business. This overshadowed strong profit margins in avionics.
Outlook for 2025 and Future Ventures
For 2025, Thales expects like-for-like sales growth of 5-6%, reaching between €21.7 billion and €21.9 billion. The company also predicts a 40-60 basis point rise in operating margins, bringing them to 12.2%-12.4%. Orders are expected to continue outpacing sales.
When asked about potential collaborations with Airbus and Leonardo to consolidate loss-making satellite businesses, Caine remained tight-lipped. “Let us work,” he told reporters.
With inputs from Reuters