THALES PRESS RELEASE
July 21, 2022
Paris La Défense
Thales reports its
2022 half-year results
- Order intake1: €11.2 billion, up 46% (+43% on an organic basis2)
- Sales: €8.3 billion, up 7.7% (+5.4% on an organic basis)
- EBIT3: €891 million, up 23% (+21% on an organic basis)
- Adjusted net income, Group share2: €726 million, up 23%
- Consolidated net income, Group share: €566 million, up 31%
- Free operating cash flow3: €820 million, 113% of adjusted net income, Group share
- Full year 2022 guidance upgraded4:
- Book-to-billratio5 significantly higher than 1
- Organic sales growth between +3.5% and +5.5%6
- EBIT margin target: 10.8% to 11.1% (unchanged)
Thales's Board of Directors (Euronext Paris: HO) met on July 20, 2022 to review the financial statements for the first half of 20227.
"Over H1 2022, Thales achieved very solid results in spite of a complex operating environment marked by supply chain tensions and the geopolitical context.
Strong commercial momentum and the entry into force of the Rafale contract in the United Arab Emirates have enabled order intake to reach a record level of €11.2 billion, reinforcing visibility on future activity.
Organic sales growth exceeded 5% again, driven in particular by the digital identity and security segment (DIS, formerly Gemalto), which achieved double-digit growth for the third consecutive quarter.
The EBIT margin and free operating cash flow were ahead of plan.
Given the robustness of activity in the first months of 2022, and despite a global environment marked by high uncertainties, we have decided to raise our full year order intake and sales growth targets.
Our roadmap for the coming months is clear: accelerate recruitment, strengthen the resilience of our supply chains and manage the consequences of inflation while continuing to implement all our strategic initiatives.
I would like to once again thank our 80,000 employees who relentlessly create value for our customers every day."
Patrice Caine, Chairman & Chief Executive Officer
- In accordance with standard IFRS 5, the financial data for the "transport" operating segment have been classified under "discontinued operations" following entry into exclusive negotiations with Hitachi Rail with a view to disposing of this business.
- In this press release, "organic" means "at constant scope and exchange rates". See note on methodology on page 11 and calculation on page 16.
- Non-GAAPfinancial indicators, see definitions in the appendices, page 11.
- Previous targets: book-to-bill ratio above 1, sales between €16.6 and €17.2 billion, corresponding to organic growth between +2% and +6%.
- Book-to-billratio: ratio of order intake to sales.
- Corresponding to €17.1 billion to €17.5 billion based on July 2022 scope and exchange rates.
- At the date of this press release, the limited review of the financial statements has been completed and the statutory auditors' report has been issued following the meeting of the Board of Directors.
COMMUNICATIONS DEPARTMENT - Thales - Tour Carpe Diem - 31 Place des Corolles - 92098 Paris La Défense Cedex - France - Tel.: +33 (0)1 57 77 86 26 - www.thalesgroup.com
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PRESS RELEASE
July 21, 2022
Paris La Défense
Key figures
In € millions | H1 2022 | H1 2021 | Total | Organic | |
change | change | ||||
except earnings and dividend per share (in €) | |||||
Order intake | 11,208 | 7,665 | +46% | +43% | |
Order book at end of period | 37,988 | 34,744 | +9% | +9% | |
Sales | 8,256 | 7,669 | +7.7% | +5.4% | |
EBIT8 | 891 | 722 | +23.4% | +21.1% | |
as a % of sales | 10.8% | 9.4% | +1.4 pts | +1.4 pts | |
Adjusted net income, Group share8 | 726 | 591 | +23% | ||
Adjusted net income, Group share, per share8 | 3.41 | 2.78 | +23% | ||
Consolidated net income, Group share | 566 | 432 | +31% | ||
Free operating cash flow8: | 820 | 420 | +400 | ||
Net cash (debt) at end of period8 | -894 | -2,4969 | +1,602 | ||
Order intake in the first half of 2022 totaled €11,208 million, up 46% from H1 2021 (+43% on an organic basis, i.e., at constant scope and exchange rates). The Group benefited from a strong commercial momentum in all its operating segments. At June 30, 2022, the consolidated order book stood at €38.0 billion, a new all-time record.
Sales totaled €8,256 million, up 7.7% from H1 2021, and up 5.4% at constant scope and exchange rates. The sales figures benefited in particular from the remarkable performance of the Digital Identity & Security operating segment, as well as from the recovery of the civil aeronautics business, which was severely affected last year by the public health crisis.
In the first half of 2022, the Group posted an EBIT of €891 million (10.8% of sales), compared to €722 million (9.4% of sales) in the first half of 2021, an increase of 23.4% (+21.1% on an organic basis).
At €726 million, adjusted net income, Group share10 was up 23%, in line with the EBIT increase.
Consolidated net income, Group share, amounted to €566 million, up 31% compared to H1 2021, driven by the strong increase in adjusted net income.
Free operating cash flow10 amounted to €820 million, compared with €420 million in the first half of 2021. The cash conversion ratio of adjusted net income, Group share, to free operating cash flow was 113% (71% in H1 2021). This solid performance reflects the strong commecial momentum in the first half of the year and the actions implemented since 2020 under the "Cash" initiative, as well as less pronounced seasonality in working capital than in previous years.
Net debt stood at €894 million at June 30, 2022, down €1,602 million year-on-year.
- Non-GAAPfinancial indicators, see definitions in the appendices, page 12.
- Net debt as at June 30, 2021.
- Non-GAAPfinancial indicator, see definition in the appendices, page 12.
COMMUNICATIONS DEPARTMENT - Thales - Tour Carpe Diem - 31 Place des Corolles - 92098 Paris La Défense Cedex - France - Tel.: +33 (0)1 57 77 86 26 - www.thalesgroup.com
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PRESS RELEASE
July 21, 2022
Paris La Défense
Order intake
H1 2022 | H1 2021 | Total | Organic | ||
In € millions | change | change | |||
Aerospace | 2,393 | 2,886 | -17% | -18% | |
Defense & Security | 7,150 | 3,374 | +112% | +108% | |
Digital Identity & Security | 1,631 | 1,370 | +19% | +13 % | |
Total - operating segments | 11,175 | 7,629 | +47 % | +43% |
Other | 34 | 35 | ||
Total | 11,208 | 7,665 | +46% | +43% |
Of which mature markets11 | 6,556 | 6,295 | +4% | +2% |
Of which emerging markets 11 | 4,652 | 1,369 | +240% | +229% |
Order intake in H1 2022 amounted to €11,208 million, up 46% compared to H1 2021 (+43% at constant scope and exchange rates12). The book-to-bill ratio was 1.36, versus 1.00 in H1 2021. It even reached as much as 1.45 when excluding the Digital Identity & Security segment, for which the order intake is structurally aligned with sales.
In H1 2022, Thales booked 12 large orders with a unit value of over €100 million, for a total amount of €5,155 million (€1,705 million in H1 2021):
- 2 large orders booked in Q1 2022:
- the order of two Space Inspire satellites by Intelsat
- the order of an additional Space Inspire satellite by SES
- 10 large orders booked in Q2 2022: the jumbo contract related to the supply of the Rafale to the United Arab Emirates (80 aircraft), as well as 9 orders with a unit value of between €100 million and €500 million:
- the order of a Space Inspire satellite by Arabsat
- an amendment to the contract for the development and qualification of the payloads of the first two satellites for the CO2M mission, which aims to measure the quantity of CO2 produced by human activity (European Copernicus program)
- a contract related to the supply of 6 additional Rafale aircraft to Greece
- a contract to supply the Sea Fire digital radar for three defense and intervention frigates (FDI) sold to Greece
- the order of a secure communications system by a military customer
- an amendment to the contract guaranteeing the supply of munitions to the Australian Defence Force for 10 years (SDMM)
- the order by a Middle Eastern country of 3 radars and associated support
- a new tranche of the Scorpion program for the French Army
- an amendment to the contract for the supply and support of CONTACT next- generation tactical radios for the French Army
- Mature markets: Europe, North America, Australia, New Zealand. Emerging markets: all other countries. See table on page 15.
- Taking into account a positive currency effect of €161 million and a positive net scope effect of €12 million.
COMMUNICATIONS DEPARTMENT - Thales - Tour Carpe Diem - 31 Place des Corolles - 92098 Paris La Défense Cedex - France - Tel.: +33 (0)1 57 77 86 26 - www.thalesgroup.com
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PRESS RELEASE
July 21, 2022
Paris La Défense
At €6,053 million, orders with a unit value of less than €100 million were up 2% compared to the first half of 2021. Orders with a unit value of less than €10 million were particularly dynamic, thanks in particular to the recovery in civil aeronautics and passport production, as well as to the robust pricing of smart cards.
Geographically13, order intake in emerging markets amounted to €4,652 million, up 229% at constant scope and exchange rates, benefiting from three contracts worth over €100 million, including the major contract related to the Rafale order by the UAE. At € 6,556 million, order intake in mature markets remained at a high level (+2% at constant scope and exchange rates).
Order intake in the Aerospace segment totaled €2,393 million, versus €2,886 million in H1 2021 (-18% at constant scope and exchange rates). This change is due to a high basis of comparison, since Thales Alenia Space booked the second generation of Galileo European navigation satellites, amounting to more than €700 million, in H1 2021. Commercial momentum remained solid in the Space segment, with four large contracts with a unit value of over €100 million in H1 2022. The civil aeronautics business continued to recover, particularly in the after-market business.
Order intake in the Defense & Security segment totaled €7,150 million compared to €3,374 million in H1 2021, up 108% at constant scope and exchange rates, including the 8 large orders with a unit value of over €100 million mentioned above. The segment's order book thus reached €29.0 billion, a new all-time record, representing nearly 3.4 years of sales.
At €1,631 million, order intake in the Digital Identity & Security segment was in line with sales, considering that most businesses in this segment do not book long-term orders. The order book is therefore not significant.
13 See table on page 15.
COMMUNICATIONS DEPARTMENT - Thales - Tour Carpe Diem - 31 Place des Corolles - 92098 Paris La Défense Cedex - France - Tel.: +33 (0)1 57 77 86 26 - www.thalesgroup.com
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PRESS RELEASE
July 21, 2022
Paris La Défense
Sales
H1 2022 | H1 2021 | Total | Organic | ||
In € millions | change | change | |||
Aerospace | 2,211 | 2,112 | +4.7% | +2.9% | |
Defense & Security | 4,378 | 4,152 | +5.4% | +4.1% | |
Digital Identity & Security | 1,631 | 1,370 | +19.1% | +13.1% | |
Total - operating segments | 8,221 | 7,634 | +7.7% | +5.4% |
Other | 35 | 35 | ||
Total | 8,256 | 7,669 | +7.7% | +5.4% |
Of which mature markets14 | 6,357 | 5,776 | +10.1% | +7.9% |
Of which emerging markets 14 | 1,899 | 1,893 | +0.3% | -2.1% |
Sales for the first half of 2022 amounted to €8,256 million, compared with €7,669 million in the first half of 2021, an increase of 7.7%. Despite supply chain tensions, organic change (at constant scope and exchange rates15) stood at +5.4%, thanks in particular to the solid performance of the Digital Identity & Security segment.
Geographically16, this increase in sales was more marked in mature markets, which grew by +7.9% in organic terms, and even by +8.5% in Europe. Emerging markets recorded a slight decline (-2.1% in organic terms).
Sales in the Aerospace segment amounted to €2,211 million, up 4.7% compared to H1 2021 (+2.9% at constant scope and exchange rates). This change reflects the cessation of activities in Russia (total impact estimated at around €70 million for 2022), as well as a high basis of comparison for both Space and Microwave tube businesses. The rebound in civil avionics is mixed: after-market activities recorded double-digit growth, while the original equipment business recovered only gradually, particularly in the widebody aircraft segment.
Sales in the Defense & Security segment totaled €4,378 million, up 5.4% compared to H1 2021 (+4.1% at constant scope and exchange rates). As expected, this segment rebounded in Q2 2022, with organic sales growth of +8.6%, confirming the positive momentum of most of its businesses. Radio communication products, airspace protection systems and surface radars all posted organic growth of over 10% in the first half.
In the Digital Identity & Security segment, sales were up 13.1% at constant scope and exchange rates to €1,631 million. This strong increase is explained by the combination of three factors: the rebound in passport production activities after two years affected by the public health crisis, continued growth in cybersecurity, and, finally, precautionary purchases and a price effect with respect to EMV payment cards and SIM cards, reflecting the significant increase in purchasing costs.
- Mature markets: Europe, North America, Australia, New Zealand. Emerging markets: all other countries. See table on page 15.
- The calculation of the organic change in sales is shown on page 16.
- See table on page 15.
COMMUNICATIONS DEPARTMENT - Thales - Tour Carpe Diem - 31 Place des Corolles - 92098 Paris La Défense Cedex - France - Tel.: +33 (0)1 57 77 86 26 - www.thalesgroup.com
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THALES SA published this content on 21 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 July 2022 05:03:03 UTC.
