Thales Q1 2016 order intake and sales

Thales releasing its order intake and sales for Q1 2016. Patrice Caine, Chairman & Chief Executive Officer, commented: “Business over the first few months of 2016 confirmed the acceleration of Thales’s sales momentum, which was first witnessed last year, with organic growth in sales of over 7%. Order intake is in line with our expectations. It is logically lower than in Q1 2015 when the Group recorded the Egyptian Rafale contract.”

Order intake

In the first quarter of 2016, order intake reached €2,312 million, a fall of 18% compared to the first quarter of 2015 (-17% at constant scope and exchange rates). Q1 2015 was driven by three large orders1 totalling in excess of €1 billion, specifically the Rafale contract for the delivery of 24 fighter jets with the Egyptian government. Q1 order intake was up 11% compared to Q1 2014, in which no “outstanding” orders were recorded (Q1 2014 order intake: €2,074 million). A large order worth over €100 million was recorded in the first quarter of 2016: a support contract for the British Army’s Watchkeeper UAVs. In addition, volumes of orders under €100 million were particularly high, up 24% compared to Q1 2015. From a geographical perspective2 , order intake in emerging markets (€625 million) returned to 2014 levels.

Order intake in mature markets enjoyed good momentum (€1,686 million, +11% in organic growth). Order intake in the Aerospace segment was up sharply at €1,030 million compared to €782 million in Q1 2015 (+31%). Orders related to space and commercial avionics activities were comparable to last year, while in-flight entertainment (IFE) and training and simulation activities were commercially very dynamic. At €231 million, order intake in the Transport segment was down 50% compared to Q1 2015, which saw a major signalling contract in Hong Kong increase order intake. Order intake in the Defence & Security segment stood at €1,029 million, compared to €1,566 million in Q1 2015 (-34%). As outlined above, in Q1 2015 this segment recorded the order related to the Egyptian Rafale fighter jets. After adjustments for this exceptional item, order intake in the Defence & Security segment was up, led by good sales momentum in most activities, including specifically the signing of a support contract for the British Army’s Watchkeeper UAV.

Sales

Sales for Q1 2016 stood at €2,732 million, compared to €2,576 million in Q1 2015, up 6.1% on a reported basis, and up 7.3% at constant scope and exchange rates (“organic” change), while in Q1 2015, they fell organically by 1.7% compared to Q1 2014. In geographical terms3 , this performance is due both to the return of organic growth in mature markets (+2.5%) and the continued high growth in emerging markets (+21.8%, after +11.2% in Q1 2015). In the Aerospace segment, sales stood at €1,067 million, down 1.3% compared to Q1 2015 (-0.9% at constant scope and exchange rates). Avionics business remained dynamic, particularly in support activities, offsetting temporarily low levels of activity in IFE, notably in comparison to Q1 2015 which was particularly buoyant, and in helicopter avionics, where the slowdown began in Q2 last year. Sales in the Space segment were also up, especially in observation, exploration and navigation activities, which benefited from large orders in recent years.