Thales posts jump in first-half orders on surge in defence spending

By Florence Loeve

PARIS, July 23 (Reuters) - French defence and aerospace group Thales reported on Thursday a 21% jump in order intake in the first half of 2026 and stronger-than-expected profit margins, as escalating conflicts around the world lifted military spending, boosting demand for its surveillance and defence systems.

The group said it received orders worth €12.47 billion ($14.2 billion) in the first six months, up 21% and far exceeding analysts' forecast for a 1% rise. They included 18 orders worth more than €100 million each, it said in a statement, beating last year's intake.

"The European defence rearming is real and coming," Citi analysts said, noting the strong order intake likely contributed to the free cashflow of €1.87 billion, far ahead of an expected €0.47 billion in an analysts' consensus published by Thales. 

Adjusted earnings before interest and tax (EBIT) increased by 11.4% on an organic basis to €1.37 billion, also ahead of analyst expectations, and driven by higher defence and aerospace margins, offsetting weaker performance in the cyber and digital divisions.

"We note for the first time defence margins stand meaningfully above 13% at 13.9% in H1," Jefferies analysts said in a note.

Thales' shares were up 3.4% by 0915 GMT.

Sales at Europe's largest defence electronics group rose 7.8% organically to €10.95 billion, in line with a company-provided consensus of analysts. Defence, which generates more than half of group sales, grew 13.1%.

Earlier this month, Thales raised its 2026 order-intake and cash-generation targets, lifting its book-to-bill ratio - order intake versus revenue - to 1.1 from 1.0. It also maintained guidance for organic sales growth between 6% and 7% and its adjusted EBIT margin between 12.6% and 12.8%.

COMPETITION WITH US PATRIOT

Thales CEO Patrice Caine said the EU's planned secured communication satellite constellation, called Iris², represented a "huge opportunity" for Thales. Germany's willingness to make its own constellation complementary with Iris² instead of in competition with it was a positive sign, he said on a call with analysts.

Germany has been working on its own constellation with Airbus, Rheinmetall and OHB, raising concerns about fragmentation of European efforts.

Asked about the prospects of the SAMP-T NG air defence system Thales co-developed with European missile maker MBDA, Caine said it outperformed its competitor, the U.S.-made Patriot, and had an advantage with deliveries expected around 2028 versus 2032 for the Patriot.

"Now, the U.S. political influence can rebalance those advantages," he said, adding that the SAMP-T NG nevertheless had a substantive list of prospects.

Competition between the SAMP-T NG and the Patriot has intensified with Russia's war in Ukraine as European governments race to procure such systems, creating a market worth billions of euros in potential orders.

(1 euro = 1.14 U.S. dollars)

(Reporting by Florence Loève; Editing by David Gaffen and Emelia Sithole-Matarise)