French defence electronics group Thales <TCFP.PA> reported higher first-half profits on Wednesday but toned down its organic sales growth outlook for the full year, citing a slowdown in the commercial space market.
Thales said that given an expected fall of around 10% in the sales of its global space business, it now eyed 2019 organic sales growth at the lower end of its previous guidance of 3-4%.
“The wait-and-see attitude of clients in the commercial telecoms satellite market can rationally be explained by technological changes,” Chief Executive Patrice Caine told reporters, citing an increasing sophistication in satellites.
He added that he nonetheless expected that market to grow by 5% a year over the next 10 years. The group confirmed all its other financial goals for 2019, saying it would continue to benefit from positive trends in the majority of its markets.
First-half earnings before interest and tax (EBIT) rose 8% from last year to 820 million euros while reported sales grew 9.9% to 8.2 billion euros, reflecting the recent acquisition of Gemalto. Sales were down 0.5% when excluding the effect of acquisitions and currencies.
The group reiterated that for 2019 it expected an order intake slightly over 18 billion euros and an EBIT of between 1.98 billion euros and 2 billion euros, which factors in the contribution of the recently-acquired Gemalto business.
Thales, in which the French state has a stake of 25.7% while Dassault Aviation <AVMD.PA> has a 24.7% stake, has consolidated Gemalto’s activities from April 1 onwards.