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Thales' defence growth outpaces aerospace and cyber gains

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CEO Caine cites geopolitical instability driving defence

investments

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2025 forecast: sales growth 5-6%, orders to outpace sales

(Recasts lead to include share price rise, adds analyst comment

on results in paragraphs 8 and 15)

By Tim Hepher

PARIS, March 4 (Reuters) -

Shares in France's Thales jumped more than 11% on

Tuesday, extending a surge in European weapons-related stocks,

after the defence and technology firm posted

stronger-than-expected 2024 earnings despite losses in its space

business.

Europe's largest defence electronics firm said adjusted

operating income rose 5.7% on a like-for-like basis to 2.42

billion euros ($2.53 billion) as revenues gained 8.3% to 20.58

billion euros, with defence growth dwarfing gains in aerospace

and cyber.

New orders rose by an underlying 6% to 25.29 billion euros.

Analysts had on average expected operating profit of 2.35

billion euros on revenues of 20.14 billion euros, and an order

intake of 23.76 billion euros, according to a company-compiled

consensus.

Shares in the Paris-based company opened up more than 11%.

Thales, whose shares had already soared alongside those of

its peers on Monday after European leaders pledged to boost arms

spending, said rising demand had repaid investments in defence

capacity.

"Geopolitical instability is a constant and to a great

extent it is feeding the investments made by countries in their

defence," CEO Patrice Caine told reporters.

Thales said defence sales and profits rose by an underlying 13%

last year but aerospace earnings fell by 13.9% on the same

constant basis, with R&D and restructuring costs weighing on the

space business and blotting out double-digit avionics margins.

Aerospace margins were better than feared despite the

problems in space, Jefferies analyst Chloe Lemarie said.

Investors watch Thales' growth on a constant or underlying

basis, excluding a spate of acquisitions especially in cyber

markets. Thales also bought Cobham Aerospace Communications and

sold transport signalling activities to Hitachi Rail last year.

Caine said Europe has the technology to assure its own

defence but its ability to fill any gaps left by transatlantic

tensions will depend on the extent to which political

declarations turn into firm defence orders.

Asked about talks between Thales and Airbus, as

well as Thales' traditional partner Leonardo, on a

possible new European venture combining loss-making satellite

businesses, Caine said he had no information to share just yet.

"Let us work," he told reporters.

For 2025, Thales predicted like-for-like growth in sales of

between 5% and 6% to a range of 21.7 billion to 21.9 billion

euros, and a 40-60-point increase in adjusted operating margins

to between 12.2% and 12.4%.

It said orders would continue to outpace sales.

Lemarie said the company's freshly minted revenue forecasts

probably did not include the full impact of geopolitical

developments as European nations hike arms spending further.

Caine noted that some of the shift towards higher defence

budgets had already been in place before the weekend summit.

($1 = 0.9529 euros)