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THALES POSTS LOWER SALES

10 Feb 05. Thales, the French defense technology group, reported a 2.7 percent decline Feb. 10 in full-year sales in 2004 from a year ago, below analysts’ expectations and the company’s own forecast.

Sales totaled €10.288bn($13.255bn), compared with €10.569bn posted in 2003, a decline due in large part to the revenues lost from the sale of its Geosolutions unit late in 2003, the company said. On a like-for-like comparison, sales edged down 0.25 percent on the year.

The figures were below analysts expectations and the company’s own guidance, which called for a like-for-like sales increase of two percent. Analysts polled by AFX News, Agence France-Presse’s financial news subsidiary, had expected 2004 sales in the range of €10.555-10.75bn.

The company said currency fluctuations had little impact on sales, as the rise of the pound and the Australian dollar offset weakness for the U.S. dollar. (Source: AGENCE FRANCE-PRESSE, PARIS)

This evolution is largely explained by changes in the scope of consolidation which resulted in a €239m net reduction in revenues (mainly due to the deconsolidation of Thales Geosolutions, which was divested at the end of 2003). Year-on-year exchange rate fluctuations had a limited overall effect, reducing revenues by €15m, as the rise of the pound sterling and Australian dollar offset the fall of the American dollar.
Consolidated revenues by division
(organisation in effect since July 2004)

*The Aerospace division (+3%) continued to benefit from good performance of the defence businesses, particularly equipment and systems for the French Rafale programme, export Mirage programmes and maritime patrol systems for export customers. The civil avionics business, which has seen resumed growth, benefited from strong Airbus and support business sales.
*The decrease in Air Systems revenues (8%) resulted from lower sales of air defence systems in 2004 due to the billing schedules of several major contracts, particularly for missile systems and command centres. In addition, the completion of the first tranche of the KSAM contract in South Korea and the third phase of the Starstreak programme in the United Kingdom, and lower billings on the Crotale and Shahine contracts in Saudi Arabia and the NATO ACCS Loc1 programme, were not completely offset by revenues on new contracts awarded since 2003 (European FSAF and PAAMS contracts, Saudi Arabian Shola 2 contract, French VT1 missile programme and new phases of the Starstreak and KSAM programmes). In air traffic management, 2004 revenues did not yet benefit from the recovery of the level of air traffic that was witnessed in this sector in 2004 and fell in line with the lower level of order intake recorded in 2003.
*In Land & Joint Systems (+1%), overall revenues from communication and command systems remained solid, with the deployment in France of several network infrastructure programmes and a strong increase in sales of MBITR tactical radios in the United States (40% in dollar terms). Optronics revenues also increased thanks to good performance in the United Kingdom (first significant billings on the BGTI contract). Sales of TV transmitters continued to decline due to the ongoing downturn in the American market.
*Naval division sales declined by 6%, reflecting lower billings on several frigate programmes which are nearing completion (Sawari 2 and the European LCF/F124 programme). This reduction, which was anticipated, was not yet fully offset by the increase in billings on new sonars for British submarines and Scorpène submarine export programmes, Greek Type S and Franco-Italian Horizon frigate programmes.
*In the Security division, sales increased by 13%. This sector had already recorded strong growth for the first nine months of 2004, and performance further improved in Q4 2004 with the recovery in electron tube sales, particularly for space and medical applications, and faster growth in financial transaction security and navi

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