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2018 Capital Markets Day: Thales presents its 2021 strategic priorities

06/06/2018

06.06.2018

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Key points

Highly-differentiated business model: intelligent systems to address 5 demanding end markets

Reinforcing technological leadership by accelerating R&D investments

Group ideally positioned to lead the digital transformation of its markets

Powerful operational performance levers implemented to deliver significant margin increase

Further potential upside from projected Gemalto acquisition

2018-21 financial targets:

Average organic sales growth of 3 to 5%[1], with each Thales operating segment[2]

expected to outperform its market

EBIT[3] margin to reach 11% to 11.5% by 2021

Thales (Euronext Paris: HO) is today hosting its 2018 Capital Markets Day with investors and financial analysts. During this event, Patrice Caine, Chairman and Chief Executive Officer, and members of the management team will present the Group's strategic priorities for the period 2018 to 2021.

In addition to presentations on Group strategy, financials and a review of each of the Group's main businesses, the meeting will include in-depth presentations focusing on its renewed drivers of operational performance and on the Group's unique ability to capture opportunities resulting from the digital transformation of its markets.

The first phase of Ambition 10, our strategic plan, has delivered on all of its key targets. During the next phase, we have a clear plan to drive all our businesses to industry leadership.

We will reinforce our customer-centric organization and culture, ramp up new operational performance initiatives, and accelerate our R&D investments, notably to further position ourselves as strategic partner for our customers' digital transformations.

Combined with our unique position, associating world class technology leadership and deep domain knowledge of our 5 end markets, these actions will allow us to grow profitably and faster than the market, in a sustainable way.

In a few months, the Gemalto acquisition, which we expect to complete in the second half of this year, will further accelerate this strategy, and enable us to build a global leader in digital security.

Patrice Caine, Chairman and Chief Executive Officer

The main topics to be addressed at the Capital Markets Day include:

A highly-differentiated business model: intelligent systems to address 5 very demanding end markets

Thales's business model relies on its ability to combine deep domain knowledge of its 5 complex end markets with a unique portfolio of key common technologies focused on supporting the critical decision chain, from sensors to data transmission, data processing and decision-making.

This pure player focus enables the Group to develop and deliver breakthrough solutions that help its customers think smarter and act faster, mastering ever greater complexity at every decisive moment they face.

Relying on an asset light capital base and benefiting from significant negative working capital, this business model is creating high value, with a ROCE[4] of 25% in 2017, in line with best in class global peers.

All Thales markets benefit from solid underlying trends, driven by the increasing need for mobility and connectivity, the confirmed trend-up of defence budgets, as well as the ability of intelligent systems to deliver operational and environmental efficiency, and to support more effective decision-making in critical environments.

Reinforcing technological leadership by accelerating R&D investments

To drive technological excellence and lead the digital transformation of its markets, Thales plans to further increase its self-funded R&D investments[5], which are expected to reach approximately 1 billion by 2021, up by 25 to 30% compared to 2017.

Leading the digital transformation of markets

The acceleration of digital innovation will transform and disrupt Thales customers' businesses over the next 5 to 10 years.

With its focus on critical decision chains, digital by nature, its large integrated network of digital native talents, and its unique portfolio of digital capabilities, notably in the areas of connectivity, big data analytics, artificial intelligence and cybersecurity, Thales is ideally positioned to lead the digital transformation of its markets.

To execute on this strategy and partner with its customers through their digital transformations, Thales will capitalize on its recent digital acquisitions and the launch of its digital factory , while focusing its R&D investments on digital-inside dream products, digital breakthroughs and new digital services.

Once completed, the Gemalto acquisition will further boost this strategy.

Powerful operational performance levers

Building on new marketing and sales initiatives, the Group will reinforce its customer-centric organization and culture, targeting deeper customer intimacy, sales pipeline optimization, and the development of exports from large countries.

In parallel, Thales will continue to concentrate its competitiveness initiatives on 4 high impact levers:

Procurement performance, driven by a new worldwide integrated organization as well as the introduction of powerful new methods

Engineering competitiveness, notably through the further deployment of agile methods, state-of-the-art digital engineering tools and the further reinforcement of skills and capabilities

Support function efficiency, with the implementation of standard worldwide operating models across every support function, fostering process standardization, digitization and further platforming of resources

Excellence in delivery, targeting continuous improvement in operational excellence, including bid and project execution, while delivering growth

Complemented by the positive impact on product competitiveness arising from increased R&D, the Ambition 10 competitiveness init
LINK: https://www.thalesgroup.com/en/worldwide/group/press-release/2018-capi...
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