Thales surges on back of UK contracts

FRENCH company Thales today unveiled a 17% surge in operating income to e698m (£474m) after winning a string of giant contracts from Britain's Ministry of Defence.

Bolstered by £1.7bn of UK acquisitions since 2000, the company, 31.8% owned by the French government, is challenging BAE Systems as prime contractor after some of the British company's projects suffered cost over-runs and delays.

Last year, BAE was obliged to accept Thales as design leader on a £3bn project to build two aircraft carriers for the Royal Navy. Last month the French government announced it would order a similar ship in a linked programme.

But Thales UK, which employs 16,000 Britons at 70 sites, is also part of a consortium, including pan-European defence group Eads, aero-engine maker Rolls-Royce and defence group Cobham, that won a £13bn contract last month to supply and operate a fleet of aerial tankers for the RAF - beating a BAE/Boeing alliance.

The French group built its UK strength by buying Marconi's submarine sonar business, the Shorts missile business in Northern Ireland, defence electronics group Racal, Pilkington Optronics and Thorn EMI's defence business.

Last year, although overall revenues eased 5% to e10.6bn, Thales' defence orders surged 16% to e7bn due partly to UK contracts. Net income, at e112m, was unchanged after e197bn of restructuring costs and an e85m pensions top-up.