Thales S.A.

In H1 2026, Thales reported order intake of EUR 12.5 billion, up 22% organically, and sales of EUR 10.9 billion, up 7.8% organically. Excluding the cancellation of 2 geostationary satellites, underlying sales growth was 9.6%. Adjusted EBIT rose to nearly EUR 1.4 billion, up 10% reported and 11% organically, with adjusted EBIT margin at 12.5%. Adjusted net income group share was EUR 990 million, up 13%, and free operating cash flow was EUR 1.8 billion in the CEO’s remarks and EUR 1.9 billion in the CFO’s remarks versus EUR 0.5 billion last year. Net debt was about EUR 500 million at midyear, versus EUR 1.6 billion at 31 December 2025, and down around EUR 3 billion over 12 months. For 2026, management now expects book-to-bill above 1.1 and adjusted net income to free operating cash flow conversion of 100% to 110%; it reaffirmed organic sales growth of 6% to 7% (EUR 23.3 billion to EUR 23.6 billion) and adjusted EBIT margin of 12.6% to 12.8%.

Patrice Caine emphasized that the quarter reflected Thales’ industrial ramp-up, strong positioning in defense and space, and continued demand from governments and institutions. He said H1 performance confirms a trajectory of durable and profitable growth, with strategic momentum also supported by partnerships, new product launches, and the planned Exail acquisition. His tone was confident and constructive, with repeated references to strong visibility, growing demand, and long-term opportunities in Defence, Aerospace, and Cyber and Digital.

Jeremie Papin said H1 order intake of EUR 12.5 billion and sales of EUR 10.9 billion were supported by broad-based demand, especially in Defence and Space, while adjusted EBIT was nearly EUR 1.4 billion with margin at 12.5%. He highlighted gross margin as the main EBIT driver, up EUR 219 million, alongside disciplined cost control: R&D rose 9% to 6.2% of sales, Marketing & sales rose 4%, G&A rose only 3%, and restructuring costs were EUR 24 million, down EUR 30 million year over year. He also pointed to exceptional free cash flow of EUR 1.9 billion, a big working-capital benefit, net debt of EUR 519 million at June 2026, dividend payments of EUR 606 million, and lease additions of EUR 178 million, saying the balance sheet is very sound.

Analysts pressed management on whether Defence growth above the long-term target is sustainable, and management said the momentum comes from prior industrial investment, a stronger production ramp, and broader demand across Europe, the Middle East, and Asia. Questions on Space focused on the margin trajectory, IRIS2, and the mix of institutional, defense, and commercial demand; management said institutional demand is very strong, IRIS2 discussions are progressing, and Space profitability has improved with more upside possible beyond 2027. In Digital, analysts challenged the steep margin decline, and management said roughly half or slightly more of the decline reflects prior-year one-offs and forex, with some market pressure and timing effects as well; they expect a rebound in the second half and are still aiming for around 13% for the full year, ex-one-offs.