(Updates after analysts' conference call)
PARIS, July 24 France's Thales stuck
to its financial goals for the year after cost cuts and higher
aerospace volumes fuelled an 8.7 percent underlying increase in
first-half operating profit.
Europe's largest defence electronics company posted
half-year operating profit of 360 million euros on revenues that
grew 1 percent in like-for-like terms to 6.473 billion euros.
However, its order intake fell 3 percent to 5.728 billion
euros as defence and security activities remained flat and
airlines failed to keep up strong purchases of in-flight
entertainment systems seen a year earlier, the company said.
Thales, whose high-tech systems guide everything from
commuter trains to fighter jets, is aiming for 5-8 percent
growth in core operating earnings this year, as well as broadly
stable revenues and a slight increase in new orders.
Thales boosted its first-half operating margin by 0.3
percentage points to 5.6 percent, but said unbudgeted costs had
helped slash margins on transport activities such as rail
signalling to a slender 1 percent from 3.8 percent.
Chief Executive Jean-Bernard Levy, a former media company
boss appointed last year to restore calm after tensions over
restructuring, blamed weak-performing contracts booked under a
"There is still progress we can make with project
execution," said Levy.
His predecessor Luc Vigneron ran foul of union opposition
and lost support of major shareholders. Thales is 27 percent
owned by the French state and 26 percent by family-controlled
planemaker Dassault Aviation.
Thales bagged eight contracts with a value of more than 100
million euros each in the first half, but small deals worth less
than 10 million each still make up over half its order intake.
Levy said he would not chase after large contracts of 400
million euros or more but focus his efforts on 50-200 million
euro deals that described as more numerous and more profitable.
Thales shares closed earlier up 0.34 percent at 38.2 euros,
giving the compaany a market value of 7.73 billion euros.
The shares have risen 45 percent so far this year on the
back of robust demand for fuel-saving commercial aircaft, for
which Thales is a significant supplier.
(Reporting by Cyril Altmeyer, Tim Hepher)