Thales 2011 operating profit beats forecasts

PARIS: Europe's largest defence electronics group, Thales, posted higher-than-expected full-year operating profit on Tuesday as it renegotiated contracts and cut costs, confirming a forecast for rising margins and revenue this year.

Earnings before interest and tax rose to 749 million euros ($991 million) last year, against a loss of 92 million a year earlier and ahead of the average analyst estimate of 681 million, according to Thomson Reuters I/B/E/S.

"Although the economic environment worsened more markedly than expected, particularly in defence, our order intake increased and our revenues held up well," Chief Executive Luc Vigneron said in a statement.

"We are confident in our ability to continue to improve our results, despite the serious economic uncertainties in Europe."

Thales confirmed its target for an operating margin of 6 percent this year, up from 5.7 percent in 2011.

The group said last month that 2011 revenue slipped 1 percent to 13.03 billion euros, while order intake rose 1 percent to 13.21 billion.

The state-controlled French group makes cockpit systems and in-flight entertainment panels for airliners and military hardware including drones. It also builds the radar for the Dassault Aviation Rafale fighter jet.

A surge in civil aerospace demand on the back of large aircraft orders at key clients Airbus and Boeing has been compensating for weaker defence and security revenue resulting from budget pressures in Europe.

The company forecast that its book-to-bill ratio would be slightly below 1 this year as new orders lag rising revenue.

"The budgetary situation of the group's main customers leads Thales to expect a decrease in defence orders in 2012 - excluding any exceptional export contract - which is likely to be only partially offset by the increase in commercial orders, primarily in aeronautics and ground transport," Thales said.

The company added that it would propose a dividend on 2011 results of 0.78 euros a share. An interim dividend of 0.25 euros a share was already paid in December.