CHRISTINA MACKENZIE / PARIS
Mixed fortunes for French pair as downturn mauls one but military boom helps the other
Astrong performance in the defence market in 2002 has left French group Thales fit enough to remain independent for the foreseeable future, according to chief executive Denis Ranque. But engine maker Snecma suffered badly from its exposure to civil aviation, especially Boeing, and does not expect to see sales growth before next year at the earliest - assuming the crisis in air transport does not worsen.
Thales 2002 revenues grew 7.5% to €11.1 billion ($12 billion), with defence and military aerospace representing more than two- thirds of group turnover. The company's consolidated sales in the defence sector were up 18% compared with 2001 to €6.81 billion, accounting for 61% of the total. Sales to developing countries climbed particularly strongly. It was also boosted by the €430 million sale of a frigate to Saudi Arabia.
Meanwhile Snecma, which derives four-fifths of its revenues from the civil sector, posted net income down 70% from €358 million to €106 million. Sales were down €389 million to €6.5 billion.
Snecma says that "provided international events do not exacerbate the situation in the air transport market", it expects sales to "remain generally stable in 2003".
Paul Edwards of investment bank Quarterdeck says Thales business, notably in avionics, is benefiting from growing defence budgets in developing nations, "and is mostly exposed to Airbus, which hasn't taken a hit". But, he says, not only is Snecma much more exposed to civil aerospace, but the fortunes of its best-selling engine, the CFM56, produced in partnership with General Electric of the USA, are closely tied to Boeing and its 737, which has been "hard hit" by the downturn.
Edwards dismisses market speculation that Thales will eventually merge with an international group such as EADS: "They are big enough and strong enough to stand on their own and their multi-domesticity strategy is the right one...They've shown that multi-domesticity works in Australia, Germany, the UK and elsewhere, but the issue is, can it work in the USA where they have limited exposure?"
Source: Flight International
