Outgoing Thales CEO says new focus to hold as orders rise
By Tim Hepher
PARIS (Reuters) - The outgoing head of France's Thales sought to reassure investors that a new global focus at the aerospace and defence group was irreversible, as he unveiled his last quarterly figures containing a boost from developing economies.
The company on Thursday reported flat nine-month revenue and 3 percent growth in orders, kept aloft by a 10 percent rise in the intake from emerging markets as European defence cuts bite.
Thales, 26 percent owned by the French state and 25 percent by Dassault Aviation, also said on Thursday its sales fell 3 percent on a like-for-like basis in the January-September period, while the underlying order intake was flat.
The maker of avionics and weapons systems confirmed its full-year goals and said it had begun the search for a chairman and chief executive to replace Jean-Bernard Levy.
Levy was picked by the French government in a surprise move earlier this month as the next head of power utility EDF to replace ousted chairman and chief executive Henri Proglio.
Levy's job switch leaves a vacancy at the helm of Europe's largest defence electronics group, whose shares have underperformed the Paris benchmark CAC 40 index by 12 percent since the move was announced on Oct. 15.
Levy, who has been credited with easing labour tensions and moving Thales beyond mere cost-cutting and towards growth, said in his first indirect comments on the management changeover that the company's new direction would be maintained.
"Thales has now set its sights on a clear-cut ambition,
reflected in continued efforts to improve competitiveness and
priority given to growth in emerging markets," he said.
He expressed confidence in the company's ability to deliver "sustainable, profitable growth".
NATURAL SUCCESSOR
Internal candidates to replace him could include Chief Operating Officer Patrice Caine, seen by some media as his natural successor, or Pascale Sourisse, senior executive vice-president for international development, whose name has twice before been linked with the roughly 1 million euros-a-year role.
Some industry sources have also suggested Airbus Group strategy chief Marwan Lahoud as a possible external contender, but Lahoud recently ruled himself out of the race to succeed the head of aero engines, defence and security equipment maker Safran, saying through a spokesman he was staying at Europe's largest aerospace group.
The combination of the two vacancies could trigger a shake-up of top jobs in the French defence industry and Safran's CEO, Jean-Paul Herteman, who is expected to stand down next year, said earlier on Thursday that the search for a successor was going smoothly.
Levy remains at Thales pending an official handover at a meeting of state-controlled EDF's shareholders on Nov. 21.
Fresh orders at the nine-month stage were dominated by Thales's aerospace business, which posted 34 percent growth in orders compared with 4 percent higher revenue.
Thales echoed other aerospace companies including Safran in reporting strong momentum in commercial aviation activities despite recent investor worries about a downturn.
Defence, security and transport orders and revenue fell.
For 2014, Thales is aiming for stable orders, including a double-digit percentage growth rate for the order intake from emerging markets and stable revenue.
It also targets growth of between 5 and 7 percent in operating profit, but says its stake in French naval shipyard DCNS will contribute less than expected for the full year.
Thales shares earlier closed up 0.4 percent at 37.885 euros, while the CAC 40 gained 1.3 percent.
(Editing by Greg Mahlich and David Holmes)
