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11 Feb 04. In 2003, Thales group revenues totalled €10,588m1, showing a decline of 4.7% compared to 2002 (€11,105m). On a like-for-like basis, the organic variation in 2003 sales is +0.1%2. In Q4 2003, the organic increase in consolidated sales is +6.5% versus Q4 2002 (excluding billing of the Sawari 2 hulls). This represents a very significant increase compared to the first 9 months of 2003 (-3 %). Although exchange rate fluctuations had an important effect throughout all of 2003, their impact was less visible in Q4 2003. For the full year 2003, the impact of exchange rate fluctuations cut €378m off the revenues of international sales after their conversion into euros. This mainly concerned subsidiaries based in the UK and North-America. Exchange fluctuations had an impact on sales of €144m in 2002 and €218m in H1 2003.

The change in the scope of consolidation represented a fall in sales of €146m. This covers mainly the divestments of Thales Microsonics and Thales Contact Solutions in October 2002, Thales Antennas in July 2003, and Thales Geosolutions in November 2003 which was deconsolidated in Q4 2003.

On a like for like basis, Defence sales remained virtually stable in 2003. Sales from communication activities and especially from optronic systems displayed significant increases, mainly in France and in Asia. These increases compensated the slight decreases witnessed in other activities where several major export programmes, in particular Sawari 2 and Mirage 2000, have now entered advanced phases. In addition, new contracts awarded to Thales in the last few months have for the time being only had a limited impact on sales. Excluding the Sawari 2 hull bookings, the organic increase in defence sales was 1%.

Overall, the contribution of Defence sales to 2003 consolidated revenues rose to 63% from 61% in 2002. By including the military sales of Aerospace activities, Defence businesses represent 70% of Thales 2003 revenues.

In spite of the continuing downturn in commercial aviation, Aerospace revenues increased by nearly 5% on a like for like basis. In Q4 2003, Aerospace revenues increased by 13.5%. This positive trend is largely due to increased sales in simulation and avionics activities.

IT&S revenues displayed an organic decrease of -4.3%, which is mainly due to the unfavourable economic environment in the first months of 2003 as well as the continued decline in civil telecommunications businesses. However, sales recorded by the secure operations and satellite positioning equipment businesses progressed significantly throughout all of 2003. The positive trend recorded in these activities, combined with the resilience of the electronic tubes and information systems businesses, explain the 7.5% growth recorded by IT&S sales in Q4 2003.

In 2003, sales outside of Europe fell by 10% to €4.5bn, half of which is explained by exchange rate fluctuations. Near East and Middle East sales were €1.5bn and Asia-Pacific sales exceeded €1.5bn. North American sales stood at just under €1bn in 2003, which is a decrease of 20% mainly due to the fall of the dollar.

In 2003, sales booked in Europe showed a moderate increase and represented 57 % as opposed to 55 % in 2002. Sales booked in the United Kingdom fell because of the fall in the Sterling Pound. On a like for like basis, Thales UK contributed more than €1.7bn to consolidated sales (including exports from the United Kingdom), which is comparable to it’s contribution in 2002.

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