Thales order intake jumps 21% to €12.47B as defence spending surges

Thales reported H1 order intake of €12.47 billion, up 21% and far exceeding analysts' 1% growth forecast.

"Defence contributes significantly to this growth," Chief Executive Officer Patrice Caine said.

Organic sales at Europe's largest defence electronics group rose 7.8% to €10.95 billion, in line with a company-provided consensus. Defence, which generates more than half of group revenue, grew 13.1%. Adjusted EBIT increased 11.4% to €1.37 billion, including a €450 million charge from Germany's cancellation of a program for six F126 frigates. Thales did not disclose per-share earnings.

The results show surging demand for European military equipment as conflicts around the world drive government spending higher. Thales raised its book-to-bill ratio target to 1.1 from 1.0, implying order intake will exceed revenue by 10 percent this year. It maintained guidance for 6 percent to 7 percent organic sales growth and an adjusted EBIT margin between 12.6 percent and 12.8 percent.

The company booked 18 orders worth more than €100 million each during the period, easily surpassing last year's intake. The strong performance mirrors trends across European defence contractors including Leonardo and Dassault Aviation, which have also reported rising order backlogs as NATO members boost military budgets in response to heightened geopolitical tensions.

European defence stocks have rallied over the past year as governments across the continent commit to higher military spending. Thales, with its portfolio spanning radar, avionics, and secure communications, is among the key beneficiaries alongside Rheinmetall and BAE Systems.

Thales is pressing ahead with a planned satellite joint venture with Airbus and Leonardo, expected to close in 2027 pending EU antitrust approval. The deal, which aims to create a European space champion, faces opposition from German satellite maker OHB. Thales also announced plans to acquire naval drone company Exail for about €3.9 billion to strengthen its position in underwater warfare. Finance Chief Jeremie Papin said the transaction should conclude by the second half of 2027.

The order surge shows sustained demand for Thales's surveillance and defence systems across multiple theatres. Investors will watch for updates on the Exail acquisition and satellite venture as both deals face regulatory scrutiny, with the satellite joint venture requiring clearance from EU competition authorities. The company's ability to execute on these strategic initiatives will determine whether it can sustain its growth trajectory beyond the current ordering cycle.

This article is for informational purposes only and does not constitute investment advice.