THALES (EPA:HO) - Thales reports its order intake and sales at 30 Septembre 2020 - Press release - 22 October 2020

Transparency directive : regulatory news

22/10/2020 07:00

PRESS RELEASE
22 October 2020
Paris La Défense, France

         Thales reports its order intake and sales at 30 September 2020

* Order intake: EUR9.2 billion, down 12% (-18% on an organic basis(1))
* Sales: EUR11.7 billion, down 5.6% (-10.5% on an organic basis)
* Marked improvement in sales in Q3:
- Total organic change: -4.3% (-19.9% in Q2)
- Organic change excluding aeronautics: +1.5% (-14.8% in Q2)
* All 2020 financial objectives confirmed

Thales (Euronext Paris: HO) announces today its order intake and sales for the
period ending 30 September 2020.

                        9 months  9 months   Total    Organic
                          2020      2019     change   change
Order intake
(in EUR millions)
Aerospace                 2,268     2,625     -14%      -13%
Transport                   805       868      -7%       -6%
Defence & Security        3,853     5,270     -27%      -27%
Digital Identity &
Security                  2,227     1,621      n.m.      -4%
Other                        27        62       -         -
Total                     9,181    10,445     -12%      -18%

Sales (in EUR millions)
Aerospace                 2,898     3,787   -23.5%    -23.3%
Transport                 1,102     1,268   -13.1%    -12.3%
Defence & Security        5,469     5,670    -3.6%     -3.3%
Digital Identity &
Security                  2,201     1,631      n.m.    -4.2%
Other                        46        54       -        -
Total                    11,714    12,410    -5.6%    -10.5%
Of which mature
markets(2)                8,640     8,869    -2.6%     -6.7%
Of which emerging
markets(2)                3,074     3,541   -13.2%    -20.1%

(1) In this press release, "organic" means at constant scope and exchange rate.
See note on methodology on page 33 of the 2019 universal registration document,
and calculation on page 7 of this press release
(2) Mature markets: Europe, North America, Australia, New Zealand. Emerging
markets: all other countries. See table on page 6

"After the unprecedented disruptions to Q2 2020 caused by the Covid-19
pandemic, sales in Q3 improved significantly thanks to the efforts of Thales
teams worldwide. All business lines apart from civil aeronautics demonstrated
the Group's resilience in the face of this crisis. Unsurprisingly, civil
aeronautics sales were down sharply in Q3, by around 45%.
Q3 order intake was in line with our expectations, and a number of large
contracts, especially in defence and the space domain, are being finalised.
Against a backdrop of considerable economic and public health uncertainty, all
the teams remain committed to implementing the global adaptation plan, which is
expected to generate savings of some EUR800 million in 2020. We confirm all our
financial objectives for the year."
Patrice Caine, Chairman & Chief Executive Officer

Order intake
In the first nine months of 2020, order intake stood at EUR9,181 million, down
12% compared to the first nine months of 2019 (-18% at constant scope and
exchange rate(3)). Over the period, Thales received six large orders with a
unit value of over EUR100 million (compared with nine large orders as at 30
September 2019), representing a total amount of EUR859 million:
* 1 large order booked in Q1 2020, for an air surveillance system for a Middle
Eastern country
* 3 large orders booked in Q2 2020:
  o the supply of anti-submarine sonars to the US navy (Defence & Security
segment)
  o a 10-year contract for the supply of munitions to the Australian army(4)
(Defence & Security segment)
  o the construction of 2 telecommunications satellites for SES (Aerospace
segment)
* 2 large orders received in Q3 2020, both in the Defence & Security segment:
  o The third tranche of the Scorpion programme, to deliver armoured vehicles
to the French army
  o a support and services contract for the French army

Orders with a unit value of less than EUR100 million totalled EUR8,322 million,
down 3% compared to the first nine months of 2019, after the integration of
Gemalto (and down 10% on a basis that includes Gemalto's Q1 2019 order
intake).

From a geographical(5) perspective, order intake was down 20% in emerging
markets (-31% on an organic basis). Mature market orders were down 9% (-14% on
an organic basis), with a more significant decline in France (-27% on an
organic basis), mostly due to the drop in civil aeronautics orders.

(3) Taking into account a negative exchange rate effect of EUR84 million and a
net positive scope effect of EUR720 million, relating mainly to the
consolidation of Gemalto at 1 April 2019 (Digital Identity & Security
segment)
(4) Contract worth a total of EUR600 million over 10 years, of which EUR200
million booked in 2020
(5) See table on page 6

At EUR2,268 million versus EUR2,625 million for the first nine months of 2019
(-13% on an organic basis), order intake in the Aerospace segment was still
heavily impacted by the collapse of the civil aeronautics market, despite a
dynamic institutional space market (order intake for the Space business was up
33% compared to the first nine months of 2019).

Order intake in the Transport segment stood at EUR805 million, down 7% compared
to the first nine months of 2019. Strong demand in mainline rail signalling
solutions was not enough to offset the delayed signature of urban signalling
contracts, notably caused by the financial difficulties of some operators.

Order intake in the Defence & Security segment stood at EUR3,853 million,
compared with EUR5,271 million for first nine months of 2019 (-27% on an
organic basis). The decline was due to an unfavourable basis of comparison:
order intake had been particularly robust in the first nine months of 2019. A
number of large contracts are currently being finalised and should be signed in
Q4 2020, notably for military naval systems and communications networks.

At EUR2,227 million, order intake in the Digital Identity & Security segment
was close to sales, considering that most businesses in this segment do not
book long-term orders.

Sales

9m 2020 sales stood at EUR11,714 million, compared with EUR12,410 million for
the same period in 2019, down 5.6% after the integration of Gemalto (-10.5% at
constant scope and exchange rates(6)).

After Q2 had been heavily impacted by the Covid-19 crisis (-19.9% on an organic
basis), sales in Q3 showed strong signs of recovery (-4.3%). Sales were even
slightly up (+1.5%) when excluding aeronautics businesses.

From a Geographical(7) perspective, the decline in sales was most marked in
emerging markets (-20.1% on an organic basis), reflecting anticipated phasing
effects on a few large contracts, especially in transport, after several years
of strong growth. The decline was more moderate in mature markets (-6.7% on an
organic basis), despite the major drop of civil aeronautics sales in France.

Sales in the Aerospace segment amounted to EUR2,898 million, organically down
23.3% compared to the first nine months of 2019. This decline was primarily due
to the collapse in civil aeronautics demand (approximately -50% since Q2 2020).
Excluding civil aeronautics, sales rebounded strongly: having fallen by almost
20% in Q2, they were up 5% in Q3 2020.

(6) The calculation of the organic change in sales is shown on page 7
(7) See table on page 6

In the Transport segment, sales came in at EUR1,102 million, organically down
12.3% compared to the first nine months of 2019. This was due to both phasing
effects on major urban rail signalling contracts, particularly in Doha (Qatar)
and London, and the impact of Covid-19 related disruptions.

Sales in the Defence & Security segment totalled EUR5,469 million, organically
down 3.3% compared to the first nine months of 2019. The segment benefited from
a significant catch-up effect in Q3 2020, with sales up 5.4% on an organic
basis. This return to growth attests to the strong dynamics of the Group's
solutions, with an order book at end-September 2020 of close to EUR20
billion.

At EUR2,201 million, sales in the Digital Identity & Security segment were down
2% at constant scope (9 months 2019 + Gemalto's Q1 2019). This modest decline
was due to the adverse impact of the public health crisis on the demand for
passports and IoT connectivity modules. It was partially offset by
stronger-than-expected sales in EMV payment cards and SIM cards.

Outlook

The global environment has been profoundly changed by the Covid-19 public
health crisis, which is affecting all companies, including Thales. The public
health and macro-economic context remains uncertain and could affect the pace
of recovery of air traffic and corporate investment plans, particularly in
cybersecurity and the Internet of Things.

Thanks to the efforts of all the teams, Thales internal productivity has
returned to a level close to normal since early July. However, business is
still disrupted by travel restrictions, difficulties in accessing certain
customer sites and occasional supply-chain issues.

The Group continues to implement its global adaptation plan, which should
generate savings of around EUR800 million for the year: approximately EUR750
million in EBIT and a reduction of at least EUR50 million in net operating
investments(8).

Consequently, based on the current economic and public health situation, Thales
confirms the objectives for 2020 set in July:
* As in 2019, a book-to-bill ratio above 1;
* Sales in the range of EUR16.5 billion to EUR17.2 billion(9), taking into
account significant disruptions in civil aeronautics combined with the recovery
of productivity in other segments;

(8) Net operating investments in 2019: EUR496 million
(9) Based on the scope and exchange rates of July 2020

* EBIT in the range of EUR1,300 million to EUR1,400 million(10), corresponding
to an EBIT margin of around 8% for the full year, thanks to the full effect of
the global adaptation plan, ongoing Ambition 10 competitiveness initiatives and
the ramp-up of cost synergies related to the Gemalto acquisition.

In H2 2020, the recurring operating margin(11) is expected to return to a level
close to H2 2019.

                                     ****

This press release contains certain forward-looking statements. Although Thales
believes that its expectations are based on reasonable assumptions, actual
results may differ significantly from the forward-looking statements due to
various risks and uncertainties, as described in the Company's Universal
Registration Document, which has been filed with the French financial markets
authority (Autorité des marchés financiers - AMF).

About Thales

Thales (Euronext Paris: HO) is a global leader in advanced technologies,
investing in digital and "deep tech" innovations - connectivity, big data,
artificial intelligence, cybersecurity and quantum computing - to build a
confident future crucial for the development of our societies. The Group
provides its customers - businesses, organisations and governments - in the
defence, aeronautics, space, transport, and digital identity and security
domains with solutions, services and products that help them fulfil their
critical role, consideration for the individual being the driving force behind
all decisions.

Thales has 83,000 employees in 68 countries. In 2019 the Group generated sales
of EUR19 billion (on a pro forma basis including Gemalto over 12 months).

CONTACTS

Thales, Media Relations
Cédric Leurquin
+33 (0)1 57 77 90 93
cedric.leurquin@thalesgroup.com

Thales, Analysts/Investors
Bertrand Delcaire
+33 (0)1 57 77 89 02
ir@thalesgroup.com

FIND OUT MORE
Thales Group
Download photos

(10) Based on EUR130 million in restructuring costs (EUR102 million in 2019)
and EUR70 million in joint-venture contributions (EUR171 million in 2019)
(11) Recurring operating margin: EBIT before restructuring costs and
joint-venture contributions as a proportion of sales

Order intake by destination - 9 months 2020

                        9 months  9 months   Total    Organic 9m 2020
                          2020      2019     change   change  weighting
                                      in %
In EUR millions
France                    2,190    2,961     -26%      -27%     24%
United Kingdom              524      749     -30%      -34%      6%
Rest of Europe            2,185    2,236      -2%       -9%     24%
Sub-total Europe          4,899    5,945     -18%      -21%     53%
United States and Canada  1,533    1,346     +14%       +1%     17%
Australia and New Zealand   607      466     +30%      +31%      7%
Total mature markets      7,039    7,757      -9%      -14%     77%
Asia                      1,040    1,467     -29%      -37%      6%
Near and Middle East        576      598      -4%      -19%     11%
Rest of the world           526      623     -16%      -26%      6%
Total emerging markets    2,142    2,688     -20%      -31%     23%
Total all markets         9,181   10,445     -12%      -18%    100%

Sales by destination - 9 months 2020

                        9 months  9 months   Total    Organic 9m 2020
                          2020      2019     change   change  weighting
In EUR millions                             in %
France                    2,920    3,281     -11.0%    -11.7%    25%
United Kingdom              859      887      -3.1%     -5.9%     7%
Rest of Europe            2,679    2,589      +3.5%     -2.4%    23%
Sub-total Europe          6,458    6,757      -4.4%     -7.4%    55%
United States and Canada  1,461    1,419      +3.0%     -9.2%    12%
Australia and New Zealand   721      693      +4.0%     +5.3%     6%
Total mature markets      8,640    8,869      -2.6%     -6.7%    74%
Asia                      1,531    1,786     -14.2%    -21.7%    13%
Near and Middle East        798      988     -19.2%    -22.8%     7%
Rest of the world           744      767      -3.0%    -12.4%     6%
Total emerging markets    3,074    3,541     -13.2%    -20.1%    26%
Total all markets        11,714   12,410      -5.6%    -10.5%   100%

Order intake and sales - Q3 2020

Orders
In EUR millions
               Q3 2020 Q3 2019 Total change Organic change
Aerospace        643     866    -26%            -24%
Transport        364     311    +17%            +19%
Defence &
Security       1,428   1,462     -2%             -2%
Digital
Identity &
Security         640     792    -19%            -14%
Total -
operating
segments       3,076   3,431    -10%             -8%
Other             13      19      -               -
Total          3,088   3,450    -10%             -8%

Sales
In EUR millions

Aerospace        952   1,177  -19.1%          -17.6%
Transport        385     433  -11.2%           -9.4%
Defence &
Security       1,881   1,789   +5.1%           +5.4%
Digital
Identity &
Security         728     802   -9.2%           -4.0%
Total -
operating
segments       3,945   4,201   -6.1%           -4.3%
Other             18      19      -              -
Total          3,963   4,220   -6.1%           -4.3%

Organic change in sales by quarter

                2019  Currency  Impact of    2020  Impact of    Total Organic
                sales impact    disposals   sales acquisitions  change change
In EUR millions
Q1             3,361   -0           -       3,899     +697     -16.0%   -4.7%
Q2             4,829  -20           -       3,852       +0     -20.2%  -19.9%

H1             8,190  -20           -       7,751     +697      -5.4%  -13.6%
Q3             4,220  -79           -       3,963       +0      -6.1%   -4.3%

9 months      12,410  -99           -      11,714     +697      -5.6%  -10.5%

Main scope effects:
* Disposals: none
* Acquisitions: consolidation of Gemalto from 1 April 2019 (Digital Identity &
Security segment)

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

THALES's latest news

15/05/2024 22:59

THALES (EPA:HO) - Thales reports its order intake and sales at 30 Septembre 2020 - Press release - 22 October 2020

Transparency directive : regulatory news

THALES's latest news

Other stories