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Investing.com -- Dassault Aviation (EPA:AM) shares fell 6% on Wednesday after the company on Tuesday reported weaker-than-expected first-half results, driven by delayed Rafale deliveries and a drop in business jet orders.
The French company recognizes Rafale sales only upon delivery, rather than based on percentage of completion.
Fewer deliveries during the first half of 2025 contributed to the miss across key financial metrics. Dassault reaffirmed its full-year 2025 guidance despite the shortfall.
The Rafale program remained a central focus, with continued international momentum.
Potential export contracts from countries including India and Indonesia remain under consideration.
France’s revised defense budget target of €67 billion by 2027, moved forward from a previous 2030 target, was cited as a factor that could support additional domestic orders.
“On the positive side, the Rafale continues to enjoy strong momentum & we see scope for further orders mid-term (and potentially >25 deliveries in 2025),” said analysts at BofA Securities in a note.
The business jet segment continued to face challenges. Falcon order intake declined to eight units in the first half, compared with 11 in the same period last year.
The company cited supply chain constraints, particularly in fuselage and wing components, as an ongoing issue expected to persist for 12 to 18 months.
Tariffs in the United States were identified as an additional source of uncertainty, raising questions about the competitiveness of Dassault’s products relative to U.S.-based manufacturers.
BofA also said Dassault highlighted discrepancies in how the FCAS project is progressing, particularly in contractor selection and the absence of a clear program leader.
“In our view there are clearly frictions between the partners (mainly Dassault & Airbus),” the brokerage said.
Decisions related to phase two of the program are expected by year-end. Indra’s second-quarter results may provide additional information on the program, the company said.
“As such we reassess our 2025E & mid-term delivery profile on the Falcon (see 38 in 2025) & cut our 2025-27 op profit estimates c.4-7%,” Bofa added.