By Mauro Orru
Thales reported higher orders for the first quarter, led by a booming defense business as wars in Ukraine and Iran prompt governments to strengthen their air defenses with new systems and radar technology.
Modern warfare in Europe and the Middle East showed that nations under attack and those in the vicinity remain vulnerable to aerial threats from missiles and drones. NATO-member warplanes shot down several Russian drones over Poland last year, while Iranian missiles and drones have damaged infrastructure across Qatar, Bahrain and other nations in the Gulf since the U.S. attacked Tehran in late February.
Russia's invasion of Ukraine and tensions in the Middle East have injected renewed impetus on governments to shore up their air defenses, a boost for companies like Thales that provide such systems and technology.
The French aerospace-and-defense company reported first-quarter orders of 4.65 billion euros, equivalent to $5.48 billion. Orders are up 23% in reported terms and 27% organically, a closely watched measure that shows performance at constant scope and exchange rates. Analysts had forecast orders of nearly 4.85 billion euros, according to a market consensus provided by the company.
Thales's aerospace operations contributed 1.52 billion euros, growing 1% organically due to what the company said was a high comparison basis a year earlier when it booked a large order in training and simulation. Orders at the group's smaller cyber and digital business declined 1% organically to 857 million euros.
Thales shares in Paris slid more than 3% on Tuesday as investors took stock of weakness at the group's cyber operations.
Still, Thales's defense business reported 75% organic growth in orders to 2.24 billion euros, accounting for the lion's share of all bookings. The company said it had bagged five defense orders valued at more than 100 million euros each in the quarter.
Those include a contract from the Danish Ministry of Defense for SAMP/T NG air defense systems, an order for air defense command posts to a European country as well as an order from the Qatar Emiri Air Force for Ground Master 200 MM/A and Ground Master 400 Alpha radars that the company disclosed in January, before the U.S. and Israel attacked Iran.
Thales said it was benefiting from sustained demand as events in the Middle East had made its defense products more relevant, particularly in air defense, air surveillance and underwater mine warfare. Orders across all businesses in the Middle East and its vicinity nearly tripled organically in the quarter to 460 million euros.
Overall sales globally increased 7.2% in reported terms and 9.7% organically to 5.32 billion euros, above analysts' estimate of 5.19 billion euros.
The group confirmed guidance for 2026, projecting organic sales growth between 6% and 7%, with an adjusted earnings before interest and taxes margin between 12.6% and 12.8%.
Write to Mauro Orru at mauro.orru@wsj.com
(END) Dow Jones Newswires
04-21-26 0516ET
