(Adds CEO quotes)
PARIS Feb 28 France's Thales reported
a slightly brisker than expected 11 percent increase in
operating earnings for 2016 and predicted further growth in its
profits and operating margins this year as its transport
business exits the doldrums.
Last year's profit growth outpaced a 5.8 percent rise in
revenues to 14.885 billion euros, or 6.8 percent on an organic
basis, led by avionics and in-flight entertainment systems.
The defence and high-tech systems company posted operating
earnings of 1.354 billion euros.
That lifted its margin by 50 points to 9.1 percent, as cost
cuts enabled its transport division to post profits, even though
a series of weak contracts there remains a concern.
"We are going to continue to establish the group's
credibility with investors," Chief Executive Patrice Caine told
It took in 13 percent fewer orders, worth 16.5 billion
euros, compared with 2015 which had been buoyed by the radar for
two French Rafale fighter deals with Egypt and Qatar.
Analysts were on average predicting 2016 operating profit
of 1.308 billion euros on revenue of 14.851 billion, according
to Thomson Reuters I/B/E/S data.
For 2017, Thales predicted a mid-single digit organic growth
in sales and operating profit of 1.48-1.5 billion euros.
"Five percent (revenue growth), if we commit to this, it's
because we think we can achieve it, but I certainly wouldn't say
it's in the bag," Caine said.
Further out, Thales confirmed average targets of
mid-single-digit organic sales growth in the 2016-2018 period
and 9.5-10 percent operating margins in 2017-18.
Caine did not expect Thales to be affected by a slowdown in
the aerospace cycle nor the planned merger of fellow French
aerospace firms Safran and Zodiac, adding
there was little overlap between those companies and Thales.
Thales' shares are down by around 2.6 percent so far in
2017, having risen 33 percent last year.
(Reporting by Tim Hepher and Cyril Altmeyer; Editing by Sudip