Thales ((FR:HO)) has held its Q4 earnings call. Read on for the main highlights of the call.
Thales’ earnings call for 2024 showcased a strong financial performance, marked by record order intake, robust sales growth, and the successful integration of recent acquisitions. Despite facing challenges in the Space segment and a slowdown in the digital identity market, the company’s positive achievements indicate a healthy business trajectory and strategic advancement.
Record Order Intake and Backlog
Thales reported a record order intake of €25.3 billion in 2024, achieving a book-to-bill ratio of 1.23. This impressive performance was driven by 35 large orders and strong demand in the Defence and Space segments, underscoring the company’s competitive edge in these areas.
Sales and EBIT Growth
The company experienced an organic sales growth of 8.3%, reaching €20.6 billion. Additionally, Thales saw a 13% rise in adjusted EBIT, with a margin improvement to 11.8%, reflecting the company’s operational efficiency and strong market position.
Strong Cash Flow and Dividend Increase
Thales’ free operating cash flow increased by 9%, exceeding €2 billion. The company proposed a 9% dividend increase to €3.70 per share, highlighting its commitment to returning value to shareholders.
CO2 Emissions Reduction
Thales achieved a significant 56.8% reduction in Scope 1 and 2 CO2 emissions compared to 2018, surpassing its 2030 targets well ahead of schedule. This accomplishment underscores the company’s dedication to sustainability and environmental responsibility.
Successful Integration of Acquisitions
The integration of Imperva and Cobham AeroComms was successful, contributing positively to Thales’ overall performance. These acquisitions have strengthened the company’s capabilities and market reach.
Challenges in Space Segment
Despite the overall positive results, Thales’ Space segment posted a negative adjusted EBIT. This was attributed to ongoing R&D efforts and restructuring costs, indicating areas that require strategic focus and improvement.
Digital Identity Segment Slowdown
The Digital Identity activities faced challenges due to a slowdown in the banking and payment solutions markets, particularly in North America. This slowdown presents a hurdle that Thales needs to address to maintain growth in this segment.
Higher Financial Expenses
Thales noted increased financial expenses due to the cost of debt following recent acquisitions, which impacted net income growth. Managing these expenses will be crucial for future profitability.
Forward-Looking Guidance
Looking ahead to 2025, Thales provided an optimistic outlook, driven by strong 2024 results. The company aims for a book-to-bill ratio above 1, organic sales growth of 5% to 6%, and an adjusted EBIT margin between 12.2% and 12.4%. Thales plans to focus on ramping up capacity, restoring profitability in its Space business, maintaining R&D leadership, and leveraging recent acquisitions. Additionally, the company is committed to corporate social responsibility, with significant reductions in CO2 emissions and improvements in gender diversity and anti-corruption training.
In conclusion, Thales’ 2024 earnings call highlighted a robust financial performance with record achievements and strategic progress. While challenges exist in specific segments, the company’s forward-looking guidance and strategic priorities suggest a promising outlook for 2025, reinforcing its position as a leader in the industry.