Thales (HO) Q4 2018 earnings summary

Executive summary

• 2018 delivered order intake above expectations, strong sales growth led by Transport and Defence & Security, and higher profitability alongside accelerated R&D investment.

• Progressed toward 2021 leadership ambition, with extensive preparation for the Gemalto integration.

Financial highlights

• Sales were €15.855bn, up 5.3% organically; order intake was €16.034bn, up 9% organically.

• EBIT reached €1.685bn, up 25% organically, with a 10.6% margin versus 9.0% in 2017; adjusted net income, Group share, was €1.178bn versus €840m.

• Adjusted EPS was €5.55 versus €3.97; free operating cash flow was €811m versus €1.365bn, reflecting strongly negative working-capital movement.

Outlook and guidance

• 2019 targets, excluding Gemalto and GP HSM disposal: order intake around €16bn, organic sales growth of 3%–4%, and EBIT of €1.780bn–€1.800bn.

• Transport EBIT in 2019 is expected to be affected by restructuring costs.

• 2021 ambition: 3%–5% average annual organic sales growth, 11%–11.5% EBIT margin, and self-funded R&D of about €1bn per year.