Thales S.A.

Thales reported H1 2026 order intake of EUR 12.5 billion, up 22% organically, sales of EUR 10.9 billion, up 7.8% organically, adjusted EBIT of nearly EUR 1.4 billion, and an EBIT margin of 12.5%. Adjusted net income group share was EUR 990 million, up 13%, and free operating cash flow was EUR 1.8 billion to EUR 1.9 billion versus EUR 0.5 billion last year. Net debt was about EUR 500 million to EUR 519 million at June 2026, down from EUR 1.6 billion at year-end 2025. For 2026, Thales confirmed sales growth of 6%–7% or EUR 23.3 billion to EUR 23.6 billion, EBIT margin of 12.6%–12.8%, book-to-bill above 1.1, and adjusted net income to free operating cash flow conversion of 100%–110%.

Patrice Caine emphasized that the quarter reflected years of industrial investment now translating into stronger Defence production and delivery, especially in sensors and effectors. He said the business has broad-based demand across Defence, Aerospace, and Cyber, with Europe and the Middle East increasingly important, and described the group as entering H2 with confidence. He also highlighted strategic moves in counter-drone, sovereign space, trusted cloud, and the planned Exail acquisition as evidence of long-term positioning.

Jeremie Papin focused on the financial quality of the first half: EBIT rose about 10% reported, gross margin was the main driver, R&D increased 9% to 6.2% of sales, and G&A grew only 3%, showing cost discipline. He noted free cash flow was exceptionally strong because of working-capital improvement and favorable customer payment phasing, and that net debt fell to EUR 519 million after EUR 606 million of dividends and EUR 178 million of new leases. He also pointed out a French temporary corporate tax charge of EUR 57 million in H1 and said it is expected to be nearly EUR 100 million for 2026.

Analysts pressed on whether Defence’s high growth and 13.8% margin were sustainable, and management said Defence now has low-double-digit growth potential this year with margin seen above 13.5%, helped by operational leverage and continued R&D investment. Questions on Space centered on the margin recovery and IRIS2; management said Space benefited from program execution and cost actions, expects low-single-digit growth in H2, and remains optimistic that IRIS2 discussions are progressing. In Digital, analysts asked about the margin decline and recovery; management attributed much of the pressure to H1 2025 one-offs, forex, and some market softness, and said it expects a rebound in H2 without sacrificing growth.