Thales raises net profit 77 percent

11th March 2005, Comments 0 comments

PARIS, March 11 (AFP) - French electronics group Thales reported on Friday a 77 percent rise in net profit in 2004 and unveiled a restructuring plan to support competitiveness and hedge against the weak dollar.

PARIS, March 11 (AFP) - French electronics group Thales reported on Friday a 77 percent rise in net profit in 2004 and unveiled a restructuring plan to support competitiveness and hedge against the weak dollar.

Net profit rose to EUR 198 million (USD 265.3 million) from EUR 112 million in 2003.

The outcome was lower than analysts had expected. Overall they had forecast profit of EUR 218 million.

Operating profit rose by 4.5 percent to EUR 729 million from EUR 698 million in 2003, in line with the company's forecast. In March Thales had said that it would raise operating profit by 2.0-5.0 percent.

The group said that it expected to achieve slight growth of sales this year.

Operating profit should also rise by 2.0-5.0 percent as in 2004, finance director Ross McInnes said.

The group said that it was setting up a programme to increase competitiveness in order to counter the effects of the fall of the dollar and thereby achieve its target of increasing operating profit by 10.0 percent per year from 2006.

This would involve exceptional restructuring charges of EUR 200 million in 2005 and 2006.

Shares in Thales were lower in midday Paris trade, pressured by disappointment over the 2005 outlook, though fresh talk of a possible tie-up with European Aeronautic Defence and Space Company limited the stock's retreat, dealers said.

Thales shares fell 1.0 percent to EUR 32.22, while the CAC 40 index was 0.6 percent higher at 4,061.70 points. EADS shares were up 0.44 percent at EUR 22.88.

"Thales' results are not good and it's the outlook in particular that's disappointing," a Paris-based dealer said.

However, "the decline in the stock is limited by the recent comments on a tie-up with EADS", he said, with some analysts concerned that Thales may be too small to compete in a consolidated defence market.

Earlier, EADS co-chief executive Philippe Camus said that the possibility of a merger between Thales and EADS had been debated, but the issue remained open at present.

"In a company, the debates are never over. One has to react to circumstances," Camus said Friday.

Furthermore, Lagardere CEO Arnaud Lagardere, whose French media company owns 15 percent of EADS, said late Thursday that "everything remains open" on the question of a tie-up between EADS and Thales.

His remark followed recent comments by German-US car maker DaimlerChrysler, which owns 30 percent of EADS, against such a deal.

ABN Amro analysts said investors would be looking beyond the full-year numbers and will be "more interested in the company's strategic future and specifically potential merger partners for the company".

Thales CEO Denis Ranque rejected media speculation that his group was in merger talks with Italian company Finmeccanica, and said it was interested in further developing existing partnerships with its Italian peer.

Speaking in a conference call with analysts Friday, Ranque said the two groups have a number of projects on which they cooperate, and Thales was "developing those cooperations."

"I have no intention to develop further this remark ... (but) there have been no kind of merger talks with them," he said.

In February, Italian daily Il Sole 24 Ore said Finmeccanica and Thales had started talks on the possibility of merging their defence electronics operations in a deal which would create the largest global player in the sector with 9.6 billion euros in annual sales.

Ranque did not comment specifically on the possibility of a merger with EADS.

© AFP

Subject: French News

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