Thales, the French aerospace-and-defense company, experienced a decline in order intake for the third quarter, leading to a 3.5% drop in shares during morning trading on Tuesday. The company's order intake for the three months ending September was reported at 3.81 billion euros ($4.04 billion), down 10% on a reported basis and 6% organically. The aerospace business within Thales saw the most significant decline, with a 15% decrease in orders. This performance fell short of analysts' expectations, who had predicted an order intake of 4.52 billion euros, according to consensus provided by the company.
Weak orders were also observed in Thales's defence and security business, which may be attributed to the timing of an estimated EUR400 million Indonesian Rafale order not being booked within the quarter. However, Citi analyst Charles J Armitage advised against placing too much emphasis on these figures, given the inherent volatility in large orders.
Despite lower-than-expected orders, Thales remains confident in its guidance for the year, thanks to third-quarter sales surpassing analysts' expectations. Sales for the company amounted to 4.14 billion euros, reflecting a 2.4% increase on a reported basis and a 7.2% increase organically.
Notable growth was observed in Thales's aerospace and defense and security businesses, with organic sales climbing 13% and 8.1% respectively. On the other hand, the digital identity and security business contributed 811 million euros, representing a slight decline of 1.5%.
Analysts had predicted sales of around 4.10 billion euros, as per consensus provided by the company.
Looking ahead to 2023, Thales has set ambitious targets, aiming for organic sales growth between 5% and 7%, along with an earnings before interest and taxes margin ranging between 11.5% and 11.8%.
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