- Strong Sales Growth Achieved high single-digit sales growth in H1 2025, driven by Avionics and Defense, with total sales up 8.1% organically to €10.3 billion.
- Robust Order Intake Reported a book-to-bill ratio above 1, with order intake of €10.4 billion, reflecting strong commercial momentum.
- Profitability Improvement Adjusted EBIT reached €1.2 billion, a 12.7% organic growth, with a margin of 12.2%, and adjusted net income of €877 million.
- Large Contract Wins Secured significant contracts, including 26 Rafale fighter jets for the Indian Navy (€7.9 billion) and a GBP1.16 billion contract with the U.K. Ministry of Defense.
- Free Cash Flow Performance Generated strong free cash flow of €1.1 billion in H1, driven by working capital optimization, with a positive outlook for full-year cash flow generation.
Strategic Progress and Operational Highlights
Thales made notable progress on its strategic priorities, including capacity expansion, innovation, and integration of recent acquisitions. The company launched a €350 million investment plan for its Chalet site in France and continued to strengthen its employer brand. The integration of Imperva and Cobham has been successful, with synergies already materializing. For instance, the development of a 60 satellite communication system for the A400M aircraft underscores the benefits of these acquisitions. However, the Cyber segment faced inefficiencies due to the integration of Imperva's sales team, leading to a decline in Q2. Management expects a progressive recovery in H2, with positive growth anticipated by Q4.
Valuation and Outlook
Thales currently trades at a P/E ratio of 46.43, reflecting its premium valuation due to strong growth prospects and profitability. The P/S ratio of 2.34 indicates a rich valuation relative to its sales, while the EV/EBITDA of 21.6 highlights the market's confidence in its earnings potential. The company's free cash flow yield of 4.05% and ROE of 14.01% demonstrate its ability to generate cash and deliver returns to shareholders. Management reiterated its guidance for 2025, targeting organic sales growth of 6-7% and an adjusted EBIT margin of 12.2-12.4%. The company also expects a book-to-bill ratio above 1, underscoring its strong commercial pipeline.
Defense and Cyber Outlook
The Defense segment continues to be a growth driver, with double-digit sales growth in H1. Thales expects geopolitical tensions and increased defense spending, particularly in France, to further bolster its order intake. The Cyber segment, despite short-term challenges, is poised for recovery, with a focus on margin improvement and innovative solutions like file activity monitoring. The company's strategic investments and operational efficiencies position it well to achieve its 2025 targets and deliver long-term value creation.