PARIS — The French government's recent €5.2 billion (US $5.9 billion) sale of arms to Egypt will bring in close to €1 billion to Thales, an "extra large" deal, Patrice Caine, chairman of the electronics company, said.
Thales' share of the deal with Egypt is "not far from €1 billion," he told a press conference on the company's 2014 financial results. The company expects to seal further deals worth more than €500 million, he said.
Orders worth more than €500 million rank among the "extra large," while "large" refers to those more than €100 million, he said.
On Feb. 16, Egypt signed on Feb. 16 orders for 24 Rafale combat jets, a multimission frigate and missiles worth a total of €5.2 billion.
Thales is a not a prime contractor on the Egyptian deal but supplies systems on the Rafale and the frigate, and holds contracts with missile maker MBDA and with DCNS on the torpedo, Caine said.
Another defense order for equipment and service worth hundreds of millions of euros has landed from Lebanon, for which the first payment just arrived, yesterday, Caine said.
Lebanon has ordered armored vehicles, patrol boats, combat helicopters, ammunition and communication systems, and will receive training from the French services, the French Defense Ministry said in a Feb. 25 statement.
Saudi Arabia is funding the $3 billion deal agreed with Beirut and Paris last year, aimed at re-equipping the Lebanese forces, the ministry said.
Defense Minister Jean-Yves Le Drian welcomed the "effective launching of this program" with the first payment, and the first deliveries would start in April, the ministry said.
Thales has declined to give a definitive figure for the Lebanese order as this is likely to change and is managed by ODAS, a company set up by the French government to handle arms exports to Saudi Arabia, Senior Executive Vice President Pascale Sourisse said.
Thales will supply equipment, also subsystems to prime contractors and service, which makes it hard to arrive at a definite figure, she said. "We expect to put this in the extra large category," she said.
Of the total $3 billion order for Lebanon, two-thirds is for equipment and one-third for maintenance, website La Tribune has reported.
Regarding a On the $3.4 billion tender in Turkey for the Loramids air defense system, Sourisse said the talks were expected to continue through the year and a selection was unlikely this year.
"Discussions cover a number of issues, we're actively working, we hope to clear various stages this year, but we do not on the industry side expect an order contract this year," she said.
Thales is partnered with missile maker MBDA through the Eurosam joint venture, which is pitching the Aster 30 to Turkey. The European team competes with Lockheed Martin and Raytheon, which have offered the Patriot, and China Precision Machinery Import-Export Corp.
There are state-to-state talks on the tender, which opens the door to Ankara forging an alliance with Paris and Rome, Sourisse said.
"It would be an excellent opportunity to form a very strong alliance linking up France, Italy and Turkey on a large system which would be interoperable with NATO systems," she said.
NATO and US officials have told Turkey if the Chinese missile system is picked, the weapon would not be allowed to be integrated into the NATO and US joint air defense system.
Eurosam is a French-Italian joint venture which markets the Aster missile.
On the Egyptian deal, Thales will receive 25 percent of the Rafale contract and 20 percent of the frigate, while supplying and supplies the seekers on the MBDA missiles, Sourisse said.
For 2014, Thales listed 19 large orders, including the Falcon Eye spy satellite for the United Arab Emirates. Airbus Defence and Space is the lead on the industrial team, with Thales Alenia Space co-prime to supply the payload.
Thales reported operating profit slipped 3 percent to €985 million from a year ago, a decline stemming from itsthe 35 percent stake in DCNS, which reported a heavy loss for 2014.
Stripping out the DCNS holding, operating profit rose 13 percent to €1.10 billion, on sales up 2 percent at €12.97 billion.
Net attributable profit fell 12 percent to €565 million, hit by problems on civil transport contracts signed with new clients and DCNS.
Orders rose 11 percent to €14.4 billion, while those from emerging markets climbed more than 40 percent over two years to €4.3 billion.
The core defense markets in Europe are mature but delivered an unexpected rise in orders, including France. New orders for defense and security rose 4 percent to €7.1 billion.
State-owned DCNS reported a on Feb. 24 a 2014 net loss of €336 million on Feb. 24, on sales of €3.1 billion, stemming from cost overruns on the Barracuda nuclear powered submarine and civil energy projects.
DCNS has forecast a gradual return to profit, which Thales says it will help support, to improve its own profit line.
Email: ptran@defensenews.com
