Thales posts higher profit, tackles weak telecom satellite market

Credit: REUTERS/Sarah Meyssonnier

Adds detail and background on satellite market in paragraphs 8-11

PARIS, March 5 (Reuters) - France's Thales TCFP.PA on Tuesday reported an 11% underlying increase in 2023 operating profit and 8% higher sales, buoyed by a rebound in the civil aerospace market, while becoming the latest group to feel pressure in the competitive space business.

The company posted a record 2.132 billion euros ($2.31 billion) of operating profit - topping 2 billion for the first time since before the pandemic in 2019 - and sales of 18.428 billion euros, while the operating margin stood at 11.6%, up 0.6 percentage points.

Analysts were on average expecting 2023 operating profit of 2.107 billion euros on sales of 18.177 billion, according to a company-compiled consensus.

Thales, which supplies civil and military radar and digital identity systems, said its order intake was fractionally higher than the year before at 23.132 billion euros.

For 2024, Thales predicted like-for-like sales growth of 4% to 6% to reach between 19.7 billion and 20.1 billion euros. It predicted an operating margin of 11.7% to 12% and said new orders would continue to outstrip revenues.

The company also flagged it would cut about 1,300 jobs at Thales Alenia Space amid "structurally weaker demand" in commercial telecoms, and that these workers would be redeployed within the group. Some 1,000 of the affected jobs are in France.

CEO Patrice Caine said there would be no forced departures as Thales tries to keep skills in-house.

The move comes as the market for large satellites in geostationary orbit - once representing some 20 satellites a year - now stands at around 10 a year, Caine said. Traditional satellite firms face growing competition from the rapid growth of constellations of small satellites.

"So the market has more or less been divided in half...and we have to re-adapt; there's no mystery," he told reporters.

The shake-up comes weeks after Airbus, Europe's other major producer of large satellites, unveiled a fresh charge for its troubled space business.

(Reporting by Tim Hepher; Editing by Tassilo Hummel and Jamie Freed)

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