-- Thales (HO.PA) reaffirmed all of its 2026 financial targets as it recorded a surge in order intake at its defense business during the first three months of the year amid the ongoing conflict in the Middle East.
The France-headquartered aerospace and defense group on Tuesday reported a year-over-year increase in first-quarter total sales to 5.32 billion euros from 4.96 billion euros, above the FactSet-compiled consensus estimate of 5.23 billion euros. The defense and aerospace businesses contributed 3.05 billion euros and 1.38 billion euros in sales, respectively, while the cyber and digital division logged sales of 859 million euros.
Total orders also climbed over the period to 4.65 billion euros from 3.78 billion euros, largely driven by a 75% organic growth in order intake at the group's defense segment to 2.24 billion euros. Order intake in the aerospace business was up 1% organically to 1.52 billion euros, while that in the cyber and digital segment declined 1% to 857 million euros.
Geographically, order intake in mature markets jumped 31% organically, supported by double-digit organic growth in France and the rest of Europe. Emerging markets also rose 10% organically, with a notable 185% organic growth in orders in the near and Middle East region.
"Thales's Q1 2026 release this morning revealed another strong performance in the Defence business, which was offset by another weak performance in Cyber. Group revenue increased by 9.7% organic - ahead of the company's 6-7% organic sales guidance - due to 14.3% growth in Defence," analysts at Berenberg said in a flash note. "Cyber declined organically, and the company guides to a gradual and positive recovery in this business unit during 2026."
Thales continues to expect organic sales growth in the 6% to 7% range for full-year 2026, equivalent to annual sales of between 23.3 billion euros and 23.6 billion euros.
"The fundamentals supporting the Group's businesses are robust, bolstered by structurally favorable trends that provide strong visibility for the Group's growth trajectory. Furthermore, Thales remains attentive to the evolution of the global geopolitical situation and its potential short- and medium-term effects," the company said in a statement.
As of Tuesday midday, the group's shares were trading almost 4% lower in Paris.