Thales Earnings: Q3 2023 Results in Line With Consensus; FVE Maintained
Wide-moat Thales HO reported third-quarter 2023 results aligning with company-compiled consensus. Our fair value estimate is unchanged.
Sales over nine months increased by 4.5% (7.5% organically) compared with the same period of 2022, with civil aerospace driving growth in both OEM and aftermarket thanks to ongoing momentum in avionics orders.
Space was still affected by supply chain tensions. The defense and security business showed resilience with mid-single-digit growth. Digital identity and security, or DIS, demonstrated ongoing strong sales momentum outside of the Smart Cards business. However, compared with third-quarter 2022, sales declined by approximately 1.5% organically, mainly due to an outstanding third-quarter 2022 performance (up 22%).
Although the total order intake at the end of September was down by 18% versus high comps from the jumbo Rafale UAE contract booked in second-quarter 2022, management maintained full-year targets, reflecting the strong momentum of the commercial activity. Small and medium orders also continued to progress, with small orders up 8% organically.
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