Shares of Thales, a multinational company that designs and builds electrical systems, fell 3% following lower-than-expected Q3 orders. The decrease was particularly notable in the aerospace business, which contracted by 15%, and in the underperforming defence and security sector, partly due to an unbooked Indonesian Rafale order.
Citi analysts highlighted the total order intake of EUR3.81 billion ($4.04 billion), a decrease of 10% and 6% organically, which fell short of the anticipated EUR4.52 billion. This represents a significant downturn for Thales, as it grapples with challenges in its key sectors.
Despite the disappointing Q3 results, Thales reaffirmed its yearly guidance on the back of Q3 sales that surpassed expectations. The company reported sales of EUR4.14 billion, up by 2.4% in reported terms and 7.2% organically, driven by growth in aerospace and defence sectors.
Looking ahead to the rest of 2023, Thales has set ambitious targets. The company aims for an organic sales growth between 5% and 7%, alongside an earnings before interest and taxes margin of 11.5% to 11.8%. Despite the recent setbacks, Thales seems to be maintaining a positive outlook for its future performance.
InvestingPro Insights
Drawing from real-time data from InvestingPro, Thales, a prominent player in the Aerospace & Defense industry, has shown high earnings quality with free cash flow exceeding net income. This is a positive sign for investors, indicating the company's ability to generate cash and maintain its operations.
InvestingPro Tips also note that Thales has maintained dividend payments for an impressive 29 consecutive years, which signals stability and commitment to shareholder value, despite the recent downturn in its key sectors.
However, potential investors should be aware that the company's revenue growth has been slowing down recently. This aligns with the recently reported lower-than-expected Q3 orders, which saw a decrease of 10% and 6% organically.
For those interested in more in-depth analysis, InvestingPro offers additional tips and data on Thales, as well as numerous other companies.
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