Thales corrects by 6.8% this Thursday to 74.85 euros, which is a lesser evil in a market that is falling by 12% currently on the CAC40 listening to the advance of the international health crisis. Among the latest broker opinions, Goldman Sachs went back at the same time from ‘neutral’ to ‘purchase’, targeting a price of 121 euros. The publication of the group’s results was deemed “solid” despite the fragility of the ‘Aerospace’ and ‘Transport’ sectors. The group indeed ended 2019 with a 4th quarter which was commercially very dynamic, with in particular the entry in the order book of 12 projects of more than 100 ME. Thales has thus exceeded its 2019 order intake target.
New orders for fiscal 2019 amounted to 19.142 billion euros, and posted an increase of + 19% compared to 2018 (+ 4% at constant scope and exchange rates).
The Thales group achieved an Ebit of 2.008 billion euros (10.9% of revenue) in 2019, compared to 1.685 billion euros (10.6% of revenue) in 2018, up + 19% (and + 4% organic change), while continuing to increase investment in R&D. Adjusted net profit, Group share is 1.405 MdE, an increase of + 19% (6.61 euros per share), benefiting from the strong improvement in Ebit. Consolidated net profit, Group share amounted to 1.122 billion euros. It recorded an increase of + 14%, mainly driven by the increase in the result of disposals, changes in scope and others.
The financial situation remains comfortable in support of 2019 operational free cash flow of 1.372 billion euros (811 million euros in 2018). As of December 31, 2019, net debt amounted to -3.311 billion euros against net cash of 1.673 billion euros as of December 31, 2018. The net disbursement of 5.345 billion euros corresponds mainly to the acquisition of Gemalto and the disposal of the GP activity HSM. Equity, Group share amounted to 5.449 billion euros (5.7 billion euros at December 31, 2018).
Dividend increases by 27%
The Board of Directors decided to propose to shareholders, during the General Meeting convened on May 6, 2020, the distribution of a dividend of 2.65 euros per share, up + 27% compared to 2018. This level corresponds to a distribution rate of 40% of adjusted net income, Group share, per share (37.5% for the 2018 financial year).
If approved, this dividend will be detached on May 12 and paid on May 14. The payment of this dividend will be made entirely in cash and will amount to 2.05 euros per share, taking into account the deposit of 0.60 euros per share already paid in December 2019.
Ambitions confirmed despite an uncertain context
Thales has confirmed its roadmap to the market by 2023. It remains focused on generating profitable growth over time. In 2020, the Group will endeavor to continue implementing all the levers of its Ambition 10 strategic plan, despite a global environment at the start of 2020 with several factors of uncertainty: impact of Coronavirus on the markets and Group supply chains, aeronautics customs regime, resumption of Boeing 737 MAX operations, phasing of decision-making by satellite operators …
The Group has set itself 2020 objectives:
– a book-to-bill ratio greater than 1, as in 2019,
– turnover in the range of 19 to 19.5 billion euros
– a further increase in the EBIT margin, between 10.8% and 11%, thanks to the continuation of the competitiveness initiatives implemented within the framework of the Ambition 10 plan and to the ramp-up of cost synergies linked to the acquisition of Gemalto.
Over the period 2019-2023, and based on the scope of February 2020, the group has set medium-term objectives organic growth in turnover of between + 3% and + 5% on average over the 2019-2023 period. The strengthening of the Group’s growth potential linked to digital investments and the integration of Gemalto would compensate for the more uncertain prospects in the commercial space market and the lack of growth in transport over the period 2019-2023 after exceptionally high growth in 2018 (+ 18%). The phasing of all of these effects should result in weaker growth at the start of the period and gradually accelerating thereafter.
Over the period, Thales forecasts an EBIT margin of between 11.5% and 12% by 2023, reflecting the positive impact of competitiveness initiatives and synergies linked to the acquisition of Gemalto.