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Thales Group released its 2006 report in March
2007, reflecting mixed results yet demonstrating its solid
management skills. Gaining 16% increase in net income to 388
million euros despite flat growth in revenues (10,264 million
euros in 2006, compared to 10,263 million in 2005). Following
strategic changes in its holdings, Thales is bullish about 2007,
forecasting revenues of about 12 billion euros, with an operating
margin of 7.5%. Provided that the two mergers with Alcatel-Lucent
and DCN are fully implemented, Thales expects to add another
billion euros to its revenues.
Thales Aerospace Division recorded +6% organic
growth in 2006, reflecting strong performance of the division's
civil business, particularly for in-flight entertainment systems
while military aerospace business fell slightly overall. Increased
sales of avionics systems and higher billings on the Watchkeeper
program in the UK were only partly offsetting the reduction
in revenues on a number of major export programs currently being
completed. Among the top programs carried out in 2006 were the
Mirage F-1 upgrade for Morocco, supply of avionics for the British
Army Lynx and continued progress with the Rafale program, particularly
the development of the active phased array radar for this aircraft.
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| Thales
Air Systems Division remained stable compared with
2005, with only a moderate impact on revenues from new orders
for surface radars by the end of 2006. The main programs pursued
by the division included the renovation of Saudi-Arabian Shahine
and Crotale air defense systems, upgrades for Brazilian ATC
radars and new orders for air traffic management systems.
 Thales
Land & Joint Systems Division recorded a 10% increase
in revenues in 2006, with the sharpest increase in the US, with
the supply of secure communications networks for NATO forces,
providing terrestrial and satellite communications, providing
equipment for the British Falcon tactical network, and increased
deliveries of MBITR tactical
radios to the US military.
Thales Naval Division income fell sharply
by 33% reflecting the completion of several programs, particularly
the Saudi Arabian Sawari 2 frigate program. New programs for
2006 included a contract with Spanish shipbuilder Navantia to
equip several corvettes and offshore patrol vessels, the supply
of naval systems for the new patrol frigates of the Danish Royal
Navy and the progress of definition study for the future aircraft
carriers program of the British Royal Navy. Despite the reduced
income, the overall reduction in revenues of the naval division
was limited to 10% however, as the division commenced billings
on several major programs awarded in 2005. Thales Security division
recorded a 13% growth, driven by strong performance in the security
and communications market.
Strategic changes, reflected in two agreements concluded
in 2006 will have their mark on the future performance of Thales,
beginning 2007 and particularly in 2008. These include the merging
of Alcatel-Lucent business into Thales, according to a shareholders
agreement concluded on 1 December 2006 and the convergence between
naval businesses of Thales and DCN, signed on January 30, 2007,
which will include the transfer of Thales naval business to
DCN, against the acquisition of 25% DCN shares by Thales, (Thales
has an option to increase its holding to 35% after two years).
Thales is expecting to generate consolidated revenues of about
13 billion euros in 2007 and 14 billion euros in 2008, considering
the DCN deal is approved and implemented according to plans.
Resulting in the completed mergers, restructuring costs are
expected to drop compared to past years, representing 0.5% and
0.75% of revenues in the next two years..
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