HO Thales SA

   By Mauro Orru 
 

Thales shares edged lower in Tuesday morning trading after the French aerospace-and-defense company posted orders below analysts' expectations for the third quarter, with all businesses suffering a contraction in order intake.

At 0920 GMT, Thales shares traded 3.5% lower at EUR136.10.

The group's order intake came in at 3.81 billion euros ($4.04 billion) for the three months to the end of September, down 10% in reported terms and 6% organically. Thales's aerospace business recorded the most significant contraction in orders among all units, with a 15% decline on an organic basis.

Analysts had forecast an order intake of EUR4.52 billion, according to a company-provided consensus.

Orders were also weak at Thales's defence and security business, Citi's Charles J Armitage wrote in a note to clients, saying this could be due to the timing of an Indonesian Rafale order estimated at roughly EUR400 million not being booked in the quarter.

"The lower-than-consensus orders may cause some initial concerns, but given the inherent volatility in large orders, we do not believe this should be a fundamental issue," Armitage said.

Still, Thales backed its guidance for the year after third-quarter sales exceeded analysts' expectations thanks to growth at its aerospace and defence and security businesses.

The group reported EUR4.14 billion in sales, up 2.4% in reported terms and 7.2% organically.

Sales at Thales's aerospace business climbed 13% organically to EUR1.16 billion. Its defence and security business saw an 8.1% jump in sales to EUR2.14 billion, while the digital identity and security business contributed EUR811 million, down 1.5%.

Analysts had forecast sales of EUR4.10 billion, according to the company-provided consensus.

For 2023, Thales is targeting organic sales growth of 5% to 7%, and an earnings before interest and taxes margin between 11.5% and 11.8%.

Write to Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

October 31, 2023 05:39 ET (09:39 GMT)

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