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Electronics Production | May 14, 2008

Thales reports 34% increase in order intake

Thales reports a solid growth in revenues, up 7.3% on a like-for-like basis to €2.3 billion at 31 March 2008 and a sharp rise in order intake, up 34% on a like-for-like basis to €2.9 billion.
Consolidated revenues amounted to €2,308 million, compared with €2,193 million at 31 March 2007, representing overall growth of 5.3% (7.3% on a like-for-like basis).

Additions to the scope of consolidation since Q1/07 have contributed €260 million to Q1/08 revenues and correspond primarily to the space businesses acquired from Alcatel-Lucent (consolidated as from 1 April 2007). The businesses deconsolidated as from 31 March 2007 generated combined revenues of €156 million in Q1/07. These correspond primarily to Thales France's surface naval business, sold to DCNS at the end of March 2007 (€90 million in Q1/07), the Faceo facility management subsidiary divested in September 2007 (€22 million) and the electronic payment businesses divested at the start of 2008 (€30 million).

Exchange rate fluctuations from Q1/07 to Q1/08 resulted in an overall reduction in revenues of €101 million, primarily due to the translation into euros of sales by subsidiaries in other currency zones (-€81 million), mainly Thales UK (-€45 million) and Thales North America (-€28 million).

In Aerospace/Space, revenues increased by almost 14% on a like-for-like basis. The Space Division recorded particularly robust revenue growth (+22%), driven by sales of civil and military communication satellites. The Aerospace Division reported sales growth of 9% at constant exchange rates, with a marked increase in military business (+12%) due to a sharp rise in billings on ISTAR programmes (UAV-based tactical surveillance in the United Kingdom) and a 5% rise in civil activities.

In Defence, revenues increased by 7% compared with Q1/07 on a like-for-like basis, with some activities reporting higher growth than others, largely correlated to the billing schedules on the various contracts in progress. The Land & Joint Systems Division recorded sales growth of 13%, driven in particular by the optronics and land systems business. Naval Division revenues were virtually stable (-1%) at constant exchange rates. The Air Systems Division recorded an increase of 4%, with sustained growth in missile systems and air operations and stable revenues in air traffic control equipment and systems.

In Security, revenues were virtually stable, with some variations between sectors. Revenues were higher in security systems for sensitive sites and infrastructure and in enterprise services. Billing levels were constant in rail signalling. Sales were down, however, in simulation and encryption-based security equipment, as well as in ticketing and passenger access control. In ticketing and access control, this slowdown is the result of difficulties encountered on certain complex contracts and is expected to continue into Q2, affecting operating margins in this sector for the first half of the year.

New orders booked in Q1/08 were close to €3 billion, at €2,947 million (compared with €2,151 million in Q1/07). This equates to an increase of 37% (34% at constant exchange rates and 2008 scope of consolidation). This figure includes two orders worth more than €100 million each . These corresponded to the launch of the FSTA tanker aircraft programme in United Kingdom (€320 million recorded by Thales UK) in partnership with the AirTanker consortium and the Lorads III contract (€153 million) to supply a next-generation air traffic control system for Changi Airport in Singapore. No new orders booked in the first quarter of 2007 were valued at more than €100 million. Growth in orders worth €100 million or less was also significant (+15%) compared with Q1/07.

In Aerospace/Space, the sharp rise in new orders (+65%) is the result of strong performance in both sectors. The Aerospace Division, which books most of the orders placed with Thales under the FSTA programme, recorded an increase of 47%. The Space Division recorded an increase of 114%, with two satellites on order under the Eutelsat and Nilesat contracts and several orders under the Galileo programme.

In Defence, order intake also rose significantly (+40% at constant exchange rates), with particularly sharp rises recorded by the Air Systems Division (+80%), as a result of the Lorads III air traffic control programme mentioned above, and the Land & Joint Systems Division (+36%). New orders for the Naval Division increased by 6%.

In Security, order intake grew by a satisfactory 9% on a like-for-like basis, reflecting favourable developments in service activities as well as the order for simulators included in the FSTA tanker aircraft programme in the UK. In the ground transportation market, first-quarter order intake was comparable to Q1 2007.

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