May 3, 2018 / 7:20 AM / in a year

UPDATE 1-French group Thales posts higher Q1 sales, shares touch record high

* Shares climb to touch record highs

* Q1 sales up 7.2 pct on underlying basis

* Gemalto takeover deal progressing well (Adds share price reaction, detail)

By Cyril Altmeyer and Tim Hepher

PARIS, May 3 (Reuters) - France’s Thales posted a 7.2 percent underlying rise in first-quarter sales, lifting its shares to record highs, as growth in defence and transport systems boosted turnover.

Confirming targets for the full year, Europe’s largest defence electronics group said revenues reached 3.412 billion euros ($4.1 billion), with the defence division posting like-for-like growth of 9.5 percent led by radars and systems such as cybersecurity.

Thales shares were up 1.4 percent in early session trading, touching record highs. The stock is up by nearly 20 percent so far this year.

Aerospace sales dipped 0.3 percent from the first quarter of last year, when in-flight entertainment and space revenues had been particularly strong, Thales said in a statement.

Nevertheless its overall order intake, reflecting additions to future business, grew 39 percent on a comparable basis to 3.032 billion euros, led by a major air traffic management deal in Australia, French fighter sales to Qatar and a rail signalling contract in Poland.

For 2018, Thales sees an order intake of around 15.5 billion euros, marked by a recovery in defence spending and a slowdown in the telecom satellite market.

It expects 4-5 percent higher underlying aerospace sales and a group operating profit of 1.62-1.66 billion euros, up 19 to 22 percent from a restated 2017 level.

Thales said it expects to exceed its mid-term objectives which anticipate 2016-2018 organic sales growth above 5 percent and a 2018 operating margin that should exceed a range of 9.5-10 percent originally set out for the 2017-2018 period.

Thales’ chief finance officer Pascal Bouchiat also told reporters on a conference call that Thales’ acquisition of digital security company Gemalto, which is due to be closed later in 2018, was progressing well.

$1 = 0.8344 euros Reporting by Cyril Altmeyer and Tim Hepher; Editing by Sudip Kar-Gupta

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