Thales (HO) Q2 2024 earnings summary

Executive summary

• Achieved strong commercial momentum in H1 2024, with order intake up 26% to €10.8 billion and backlog at a record €47 billion, driven by large defense and security orders.

• Sales grew 8.9% in real terms (6% organically) to €9.5 billion, with robust performance in Aeronautics and Defense & Security.

• EBIT margin improved to 11.5%, and adjusted net income rose 6% to €866 million, despite higher R&D and financial expenses.

• Completed Cobham Aerospace acquisition and finalized disposal of transport activity.

• Free operating cash flow from continuing operations was €23 million, reflecting higher working capital needs.

Financial highlights

• Order intake reached €10.8 billion, book-to-bill ratio at 1.13, supported by 12 large orders, including three over €500 million.

• Sales at €9.5 billion, up 8.9% in real terms and 6% organically, with Aeronautics showing double-digit growth and Defense & Security high single-digit growth.

• EBIT up 10.4% to €1,096 million, margin at 11.5% vs. 11.4% last year; gross margin hit 29.2% of sales.

• Adjusted EPS at €4.21, up 7.7% year-over-year.

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

Outlook and guidance

• Organic sales growth guidance raised to 5–6%, targeting €19.9–20.1 billion in sales for 2024.

• EBIT margin expected to improve to 11.7–11.8% for 2024.

• Book-to-bill ratio expected to remain above 1, with strong commercial performance anticipated.

• 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.