Thales discloses its 2019 half-year results

Thales’s Board of Directors (Euronext Paris: HO) met on 3 September 2019 to review the financial statements for the first half of 20193.
 
 “In the first half of 2019, Thales posted a solid performance, once again demonstrating the resilience of its business model. 
In spite of the slowdown in the commercial space market as well as a high basis of comparison in the Transport and Defence & Security segments, sales remained stable at constant scope and currency. The commercial momentum remained solid, with the booking of 7 large orders with a unit value of more than €100 million. Operating margin grew organically, led by a very good performance in the Defence & Security segment. The results achieved by Gemalto, consolidated since 1 April 2019, were in line with our expectations. 
This positive momentum allows us to confirm our 2019 financial objectives.
All Group teams remain focused on the implementation of the second phase of Ambition 10, our strategic plan, and on Gemalto’s integration.”
Patrice Caine, Chairman & Chief Executive Officer
  • Order intake: €7.0 billion, up 10% (-1% on an organic basis1 )
  • Sales: €8.2 billion, up 9.9% (-0.5% on an organic basis)
  • EBIT : €820 million, up 8% (+4% on an organic basis)
  • Adjusted net income, Group share2: €574 million, up 7%
  • Consolidated net income, Group share: €557 million, up 22%
  • Free operating cash flow2: -€332 million
  • All 2019 financial objectives confirmed, with organic sales growth at the lower end of the previous guidance (3% to 4%)

 Key figures

 

In € millions 
except earnings per share (in €)

 
H1 
2019

 
H1 
20184

 
Total change Organic change
Order intake 6,995 6,331 +10% -1%
Order book at end of period 31,701 30,987 +2%  
Sales 8,190 7,452 +9.9% -0.5%
EBIT5 820 762 +8% +4%
in % of sales 10.0% 10.2% -0.2 pts +0.4 pts
Adjusted net income, Group share5 574 539 +7%  
Adjusted net income, Group share, 
per share5

 
2.70 2.54 +6%  
Consolidated net income, Group share 557 457 +22%  
Free operating cash flow5 -332 -272 -60  
Net cash (debt) at end of period -4,397 -1,6736 -6,071  

 

H1 2019 order intake amounted to €6,995 million, up 10% compared to H1 2018 (-1% at constant scope and currency), driven by a solid momentum in the Defence & Security segment. At 30 June 2019, the consolidated order book stood at €31.7 billion, which represents 1.9 years of sales.

Sales stood at €8,190 million, up 9.9% compared to the first half of 2018 following the consolidation of Gemalto, and down slightly (-0.5%) at constant scope and currency.

In the first half of 2019, the Group posted EBIT of €820 million (10.0% of sales), compared to €762 million (10.2% of sales) in H1 2018, up 8%. EBIT margin increased by 0.4 points at constant scope and currency. The slight dip in the reported margin is due to the consolidation of Gemalto, whose profitability is more seasonal than the rest of the Group.

At €574 million, adjusted net income, Group share grew by 7%, in line with the increase in EBIT.

Consolidated net income, Group share stood at €557 million, up 22% compared to H1 2018, with the capital gains made on the disposal of the GP HSM business (€221 million) offsetting the fall in income from operations (-€125 million) arising from the accounting entries (PPA) related to Gemalto’s acquisition.

At -€332 million, H1 2019 free operating cash flow was negative, reflecting the seasonal nature of the WCR. Net debt stood at €4,397 million at 30 June 2019, following the acquisition of Gemalto and the application of IFRS 16.

 

Notes

1 In this press release, “organic” means at constant scope and currency. 
2 Non-GAAP financial indicators, see definitions in the appendices.
3 The limited review of the financial statements has been completed and the statutory auditors’ report has been issued following the meeting of the Board of Directors
Since 1 January 2019, the Group has been applying IFRS 16 “Leases”. Since the Group chose to use the modified retrospective method, the 2018 figures in this press release have not been restated. The impact of this standard on the H1 2019 financial statements is outlined in Note 1.2 of the consolidated financial statements. 
In addition, in the framework of the Gemalto acquisition, a new “Digital Identity & Security” operating segment was created. It includes Gemalto’s businesses (consolidated since 1 April 2019) and a number of digital businesses formerly assigned to the “Defence & Security” operating segment. Segment data for 2018 was restated to take account of this change in organisation.
Non-GAAP financial indicators, see definitions in the appendices.
6 At 1 January 2019: net cash at 31 December 2018 (€3,181 million) less IFRS 16 lease debt (€1,507 million).