Thales ((FR:HO)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Thales’ recent earnings call for the first half of 2025 painted a picture of robust growth and profitability, particularly in the Defense sector. The company reported significant contract wins and improved EBIT margins, contributing to the positive sentiment. However, challenges in the Cyber & Digital segment and the impact of additional taxes slightly tempered the outlook, but overall, Thales’ performance remains strong and promising.
Strong Sales Growth
Thales achieved an impressive 8.1% organic sales growth in the first half of 2025, reaching EUR 10.3 billion. This growth was primarily driven by the Avionics and Defense sectors, showcasing the company’s ability to capitalize on market opportunities and expand its sales footprint.
Defense Sector Success
The Defense sector was a standout performer, with Thales securing significant contracts, including 26 Rafale fighter jets for the Indian Navy and a GBP 1.16 billion contract with the UK Ministry of Defense for 5,000 LMM missiles. These wins underscore Thales’ strong position and reputation in the defense industry.
Improved EBIT Margin
Thales reported an adjusted EBIT of EUR 1.2 billion, reflecting a 12.7% organic growth. The EBIT margin increased to 12.2%, driven by operational efficiencies and strong demand, highlighting the company’s effective cost management and profitability.
Record Cash Flow Performance
The company achieved a record free operational cash flow of EUR 499 million in the first half of 2025. This strong cash flow performance indicates Thales’ ability to generate cash and sustain its financial health.
Net Debt Reduction
Thales successfully reduced its net debt by more than EUR 1 billion compared to June 2024, bringing it down to EUR 3.4 billion by the end of June 2025. This reduction reflects the company’s focus on strengthening its balance sheet and financial stability.
Order Intake Momentum
Order intake for Thales reached EUR 10.4 billion in the first half of 2025, demonstrating robust demand for its products. The book-to-bill ratio remained above 1, indicating a healthy pipeline of future business.
Cyber & Digital Segment Decline
The Cyber & Digital segment faced a slight organic decline of 1.9%, primarily due to integration challenges with Imperva. This highlights the ongoing challenges in this segment, which the company will need to address moving forward.
Space Segment Challenges
The Space segment experienced challenges due to low demand in the telecom business over the past two years. However, Thales anticipates improvements in this area, suggesting a potential turnaround in the future.
Temporary Additional Tax Impact
Adjusted net income was impacted by a temporary additional corporate tax in France, amounting to EUR 60 million in the first half of 2025. This tax affected the bottom line, but Thales’ overall financial performance remained strong.
Forward-Looking Guidance
Looking ahead, Thales is targeting a book-to-bill ratio above 1, with organic sales growth expected to be between 6% and 7% for 2025. The company also aims for an adjusted EBIT margin of 12.2% to 12.4%, reflecting confidence in its operational efficiency and market demand.
In summary, Thales’ earnings call for the first half of 2025 highlighted strong growth and profitability, particularly in the Defense sector. Despite challenges in the Cyber & Digital segment and additional tax impacts, the company demonstrated robust financial health and set optimistic forward-looking guidance. Investors and stakeholders can look forward to Thales’ continued success and strategic growth in the coming months.