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UPDATE 1-Thales says aims for 10 pct margins by 2018
April 10, 2014 / 7:31 AM / in 4 years

UPDATE 1-Thales says aims for 10 pct margins by 2018

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By Cyril Altmeyer

TOULOUSE, April 10 (Reuters) - Thales, Europe’s largest defence electronics company, said on Thursday that it aimed to improve its margins to hit 10 percent by 2018 via a mix of cost cuts and revenue growth from expansion in emerging markets and civil transport and security.

Chief Executive Jean-Bernard Levy laid out the plans at the group’s first investor day in four years, which took place amid a period of defence budget cuts that are challenging Thales and its peers such as Cobham or BAE Systems.

Thales still relies on military business in mature markets for about 40 percent of its sales.

Levy, who joined Thales in late 2012 after serving as boss of media-to-telecoms conglomerate Vivendi, said Thales would consider targeted acquisitions to expand in emerging markets and bolster its civil aviation and security business.

It recently signed a deal to buy U.S. carrier JetBlue Airways’ LiveTV unit for $400 million.

“If we have opportunities we will try to accelerate our growth profile to grow more in civil markets and in emerging markets,” said Levy.

“Returning to growth must be an obsession for us.”

For 2014, Thales predicted a 5-7 percent rise in operating profit, while forecasting another year of stable sales.

Levy declined to comment on reports that Thales was interested in buying a 40 percent stake in Ansaldo STS, a railway signalling firm, owned by Italy’s Finmeccanica .

The French state is Thales’ largest shareholders with 27 percent, while Dassault Aviation holds 26 percent.

Thales shares closed at 49.30 euros per share on Wednesday before the investor day, giving the group a market capitalisation of 10.14 billion euros.

The shares fell 1.4 percent on Thursday at 7:17GMT, while the French broad index SBF 120 was up 0.3 percent.

Analysts said that while many of Thales’ goals laid out at the investor day were expected by the market, Levy’s message on the need for acquisitions was clearer than it had been in the past.

Reporting by Cyril Altmeyer; Writing by Leila Abboud; Editing by Andrew Callus

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