Thales (HO) Q2 2024 earnings summary

Executive summary

• Order intake reached €10.8 billion in H1 2024, up 26% year-over-year, with a book-to-bill ratio of 1.13, driven by large defense and security contracts, including three over €500 million.

• Sales grew 8.9% to €9.5 billion, with strong performance in Aeronautics, Defence & Security, and Digital Identity & Security.

• EBIT margin improved to 11.5%, with EBIT up 10.4% to €1,096 million and adjusted net income rising 6% to €866 million.

• Net income, Group share, surged 57% to €1,017 million, reflecting the capital gain from the Transport business disposal.

• Completed Cobham Aerospace acquisition and finalized the sale of the Transport business.

Financial highlights

• Order book reached a record €47 billion, up 16% year-over-year.

• Book-to-bill ratio at 1.13, up from 0.98 in H1 2023.

• Free operating cash flow from continuing operations was €23 million, down from €253 million, due to higher working capital needs.

• Net debt increased to €4,594 million at June 2024, mainly due to acquisitions, dividends, and share buybacks.

• Adjusted EPS at €4.21, up 8% year-over-year.

Outlook and guidance

• 2024 guidance confirmed: organic sales growth of 5–6% (€19.9–20.1 billion), EBIT margin between 11.7% and 11.8%, and book-to-bill ratio above 1.

• Free cash flow conversion ratio close to 100% of adjusted net income for the full year, excluding transport.

• Space business EBIT margin expected to be negative for the full year due to lower telecom activity, high R&D, and restructuring costs.

• Defence & Security and Aeronautics expected to drive profitability.

• €720 million free operating cash flow target for full year 2024 confirmed.