Thales set fresh targets to grow sales and margins through 2028, betting on its defense and cybersecurity operations at a time of elevated geopolitical tensions.
The French aerospace-and-defense group said it expected average annual organic sales growth of 5% to 7% through 2028 compared with 2023. Its earnings before interest and taxes margin should range between 13% and 14% in 2028, up from 11.6% last year.
Chief Executive Patrice Caine said Thales had evolved considerably in recent years in a geopolitical environment of unprecedented complexity and that its portfolio would help the company grow solidly over the next five years.
Thales's operations span space exploration, air traffic management, cybersecurity, air defense systems, drones and missiles production.
The company said it expects average annual organic sales growth of 6% to 7% in defense, with an EBIT margin of 13% in 2028. The announcement comes less than a month since Thales reported a surge in orders at its defense and security business for the first nine months of the year.
Members of the North Atlantic Treaty Organization have been diverting caches of weapons to Ukraine and now need to replenish their own stockpiles, a boost for European defense groups.
Average annual organic sales growth at Thales's cyber and digital operations should range from 6% to 7%, with an EBIT margin between 16% and 17% in 2028. In avionics, the company is forecasting average annual organic sales growth of 5% to 7%, with an EBIT margin between 13% and 14% in 2028.
Meanwhile, its space business should see average annual organic sales growth of 2% and an EBIT margin of slightly more than 7% in the period. Thales has been facing challenges in its space business amid a drop in commercial telecommunications activity, its decision to maintain a high level of research and development investments, and restructuring costs.
The group in March unveiled plans to redeploy some 1,300 jobs from its space joint venture with Italy's Leonardo within the group in 2024 and 2025, but without any forced departures. Thales said it was seeking to restore profitability in the space business.