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Thales Earnings Release 2023
1699_iss_2023-05-05_7c5143e9-dc84-4f72-bd50-8e2aae8da5f5.pdf
Earnings Release
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Thales reports its order intake and sales for the first quarter of 2023
- • Order intake: €3.4 billion, up 13% (+14% on an organic basis1)
- • Sales: €4.0 billion, up 7.9% (+9.4% on an organic basis)
- • All financial objectives confirmed
Thales (Euronext Paris: HO) today announced its order intake and sales for the first quarter of 2023.
| Order intake, in € millions |
Q1 2023 | Q1 2022 | Total change |
Organic change |
|---|---|---|---|---|
| Aerospace | 1,197 | 1,182 | +1% | -3% |
| Defense & Security | 1,441 | 1,099 | +31% | +31% |
| Digital Identity & Security | 778 | 740 | +5% | +20% |
| Other | 6 | 11 | Nm | Nm |
| Total | 3,422 | 3,033 | +13% | +14% |
| Of which mature markets2 | 2,769 | 2,596 | +7% | +8% |
| Of which emerging markets2 | 652 | 436 | +49% | +55% |
| Sales, in € millions |
Q1 2023 | Q1 2022 | Total change |
Organic change |
|---|---|---|---|---|
| Aerospace | 1,153 | 1,025 | +12.4% | +10.2% |
| Defense & Security | 2,079 | 1,950 | +6.6% | +5.4% |
| Digital Identity & Security | 779 | 740 | +5.2% | +20.1% |
| Other | 15 | 15 | Nm | Nm |
| Total | 4,026 | 3,730 | +7.9% | +9.4% |
| Of which mature markets2 | 3,197 | 3,002 | +6.5% | +7.7% |
| Of which emerging markets2 | 828 | 728 | +13.8% | +16.2% |
1 In this press release, "organic" means "at constant scope and exchange rates".
2Mature markets: Europe, North America, Australia, New Zealand; emerging markets: all other countries. See table on page 5.
"The beginning of 2023 confirms the robust momentum of all our businesses, with organic sales growth ahead of the annual target, driven in particular by the civil aeronautics and biometrics businesses. Order intake for the first quarter of 2023 was solid.
As we committed to do as part of our ESG roadmap, we obtained the validation of our CO2 emission reduction targets by the SBTi.
We remain focused on our growth strategy in buoyant markets and confirm all our financial targets for 2023."
Patrice Caine, Chairman and Chief Executive Officer
Order intake
Order intake for the first quarter of 2023 amounted to €3,422 million, up 14% compared to the first quarter of 2022 at constant scope and exchange rates, and up 13% on a reported basis.
During the quarter, the Group recorded three large orders worth over €100 million each, for a total of €401 million, compared to two large orders in Q1 2022:
- The order of satellites for the Italian earth observation constellation IRIDE;
- The order of a new tranche of the I-HAB module for the lunar orbital station;
- The order of a submarine subsystem for a military customer.
At €2,194 million, order intake of less than €10 million was up 17% compared to the first quarter of 2022, thanks in particular to the momentum of the civil aeronautics and biometrics businesses, which continued their post Covid-19 health crisis rebound.
From a geographical perspective2 , order intake was up 8% on an organic basis in mature markets and 55% in emerging markets.
At €1,197 million versus €1,182 million in Q1 2022, order intake in the Aerospace segment was down 3% on an organic basis. The good performance in aeronautics was offset by a high base of comparison in space, where the two major contracts recorded in the first quarter of 2022 were larger than the two recorded in the first quarter of 2023.
At €1,441 million compared to €1,099 million in Q1 2022, order intake in the Defense & Security segment was up 31% on an organic basis, benefiting in particular from one order of more than €100 million in 2023.
Order intake in the Digital Identity and Security segment was, as in every quarter, very close to sales, as most of the activities in this segment operate on short cycles.
2 See the table on page 5.
Sales
Sales for the first quarter of 2023 were €4,026 million, compared with €3,730 million in the first quarter of 2022, up 7.9% on a reported basis and up 9.4% at constant scope and exchange rates, including negative exchange rate and scope effects of €6 million and €39 million respectively.
From a geographical perspective2 , growth was driven both by mature markets, which recorded an increase of 7.7% on an organic basis, due in particular to strong dynamics in Europe (+9.9%) and North America (+9.8%), and by emerging markets, up 16.2% on an organic basis.
In the Aerospace segment, sales amounted to €1,153 million, up 10.2% compared to the first quarter of 2022 at constant scope and exchange rates. This increase is explained by the good momentum in the Aeronautics business, and in particular the civil aeronautics business, which continued to rebound, driven by support and services, which increased by 45% over the first quarter. As expected, space activities were stable over the first quarter, with an expectation for growth to resume during the rest of 2023.
Sales in the Defense & Security segment reached €2,079 million, up 5.4% compared to the first quarter of 2022 at constant scope and exchange rates, in line with the organic growth target for the full year.
Sales in the Digital Identity and Security (DIS) segment amounted to €779 million, up 20.1% at constant scope and exchange rates compared to the first quarter of 2022. In addition to the ongoing rebound in biometrics (high demand for secure documents, particularly passports), this performance can be explained by a new quarter of double-digit organic growth in EMV payment cards and SIM cards. The increase on a reported basis (+5.2%) includes a negative scope effect of €94 million following the transfer of cellular IoT activities to Telit as of December 31, 2022 in exchange for a 25% stake in the new entity, known as Telit Cinterion.
Outlook
Order intake and sales for the first quarter of 2023 are in line with expectations. In this context, Thales confirms all of its annual objectives, as listed below.
- As in 2021 and 2022, a book-to-bill ratio of over 1;
- Organic sales growth of between +4% and +7%, corresponding to sales of between €18.0 billion and €18.5 billion3 ;
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• An EBIT margin4 between 11.5% and 11.8%, up 50 to 80 basis points from 2022.
2See the table on page 5.
3Based on the scope and exchange rates of February 2023.
4 Non-GAAP financial indicator, see definition on page 35 of the 2022 Universal Registration Document.
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 within three domains: Defense & Security, Aeronautics & Space, and Digital identity & Security. It develops products and solutions that help make the world safer, greener and more inclusive.
The Group invests close to €4 billion a year in Research & Development, particularly in key areas such as quantum technologies, Edge computing, 6G and cybersecurity.
Thales has 77,000(a) employees in 68 countries. In 2022, the Group generated sales of €17.6 billion.
(a) These figures do not include the Transport business, which is currently being divested.
Bertrand Delcaire +33 (0)1 57 77 89 02 [email protected]
Thales, Media Relations Thales Group Cédric Leurquin +33 (0)1 57 77 90 93 [email protected]
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Order intake by destination – Q1 2023
| In € millions | Q1 2023 | Q1 2022 | Total change |
Organic change |
2023 weighting as a % |
|---|---|---|---|---|---|
| France | 786 | 558 | +41% | +42% | 23% |
| United Kingdom | 393 | 229 | +71% | +80% | 11% |
| Rest of Europe | 995 | 781 | +27% | +29% | 29% |
| Subtotal Europe | 2,175 | 1,569 | +39% | +41% | 64% |
| United States and Canada | 487 | 860 | -43% | -44% | 14% |
| Australia and New Zealand | 108 | 168 | -36% | -31% | 3% |
| Total mature markets | 2,769 | 2,596 | +7% | +8% | 81% |
| Asia | 364 | 219 | +66% | +78% | 11% |
| Near and Middle East | 134 | 79 | +69% | +67% | 4% |
| Rest of the world | 154 | 138 | +12% | +14% | 5% |
| Total emerging markets | 652 | 436 | +49% | +55% | 19% |
| Total all markets | 3,422 | 3,033 | +13% | +14% | 100% |
Sales by destination – Q1 2023
| In € millions | Q1 2023 | Q1 2022 | Total change |
Organic change |
2023 weighting as a % |
|---|---|---|---|---|---|
| France | 1,262 | 1,188 | +6.2% | +6.4% | 31% |
| United Kingdom | 255 | 217 | +17.6% | +23.9% | 6% |
| Rest of Europe | 944 | 869 | +8.6% | +11.6% | 23% |
| Subtotal Europe | 2,461 | 2,274 | +8.2% | +9.9% | 61% |
| United States and Canada | 560 | 495 | +13.3% | +9.8% | 14% |
| Australia and New Zealand | 176 | 233 | -24.5% | -19.3% | 4% |
| Total mature markets | 3,197 | 3,002 | +6.5% | +7.7% | 79% |
| Asia | 383 | 316 | +21.3% | +27.4% | 10% |
| Near and Middle East | 254 | 202 | +25.3% | +24.2% | 6% |
| Rest of the world | 192 | 210 | -8.7% | -7.8% | 5% |
| Total emerging markets | 828 | 728 | +13.8% | +16.2% | 21% |
| Total all markets | 4,026 | 3,730 | +7.9% | +9.4% | 100% |
Organic change in sales
| in € millions | Sales | Exchange | Impact of | Sales | Impact of | Total | Organic |
|---|---|---|---|---|---|---|---|
| 2022 | rate effect | disposals | 2023 | acquisitions | change | change | |
| 1st quarter | 3,730 | -6 | -103 | 4,026 | +64 | +7.9% | +9.4% |
Main scope effects:
Acquisitions:
- OneWelcome
- S21sec and Excellium
- Advanced Acoustic Concepts
• Ruag S&T
Disposals:
• Deconsolidation of IoT module business
Performance of the Transport business
| in € millions | Q1 2023 | Q1 2022 | Total change |
Organic change |
|---|---|---|---|---|
| Order intake | 503 | 349 | +44% | +45% |
| Sales | 385 | 377 | +2.3% | +4.0% |