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* Now expecting revenue for 2017 to be less than 2016 but expects activity to pick up in second half of 2017 into 2018 Source text for Eikon: Further company coverage:
(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 previous management.
"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)
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