As the leading defense technology provider in Europe, Thales has experienced substantial growth in its cybersecurity revenue through well-executed acquisitions in recent years. The company aims to achieve an average compound sales growth rate of 5% to 7% from 2024 to 2028.
Additionally, Thales is targeting an operating profit margin of 13% to 14% by 2028, an increase from 11.6% in 2023 and the anticipated 11.7% to 11.8% for this year.
These projections were presented ahead of the company's first comprehensive investor day since 2019, a time during which profit margins have begun to recover following a decline during the COVID pandemic.
Based in France, Thales is a prominent defence contractor in Europe and selected international markets, including Australia.
The company's diverse product offerings span from submarine-hunting sonar systems to biometric identity solutions for financial institutions, as well as satellites and in-flight entertainment systems for airlines.
Under the leadership of CEO Patrice Caine, who will mark a decade in the role next month, Thales has shifted its focus from areas such as rail signaling to establish a strong presence in cybersecurity, following the acquisition of chipmaker Gemalto in 2019 and U.S. cybersecurity firm Imperva in 2023.
THALES' SPACE DIVISION IN 'RECOVERY MODE'
Caine informed reporters that part of Thales' strategy would concentrate on clients willing to invest in high-value software products, particularly in banking and critical sectors like energy, which typically yield higher margins than standard cyber services.
He also acknowledged that the company's space division remains in "recovery mode," facing challenges primarily from Elon Musk's rapidly expanding Starlink satellite constellation in low Earth orbit.
Nevertheless, he expressed confidence in the future of its traditional segment, which focuses on larger, customized geostationary satellites.
Caine refrained from commenting on reports suggesting that the French government was collaborating with Thales, in which it holds a 27% stake, to acquire sensitive assets from the cyber firm Atos. This follows months of speculation regarding the ownership of supercomputers used for simulating nuclear bomb tests.
Caine noted that it is premature to assess the effects of the U.S. elections on Thales' diverse portfolio, which spans from defense to civil aviation. European countries are generally anticipated to increase their defense expenditures, while certain civil markets may experience disruptions due to the assertive stance on sanctions from president-elect Donald Trump.
Thales' Chief Financial Officer, Pascal Bouchiat, stated that the company's cyber operations, which are primarily based in the United States, are not anticipated to encounter substantial consequences.