French defence and aerospace group Thales raised its 2025 sales growth forecast after higher first-half sales and profit due to increased military spending in Europe. Sales rose 8.1% to 10.27 billion euros, with adjusted operating profit up 12.7% to 1.25 billion euros, slightly above forecasts, driven by Aerospace and Defence units.

Thales now expects 2025 sales growth of 6% to 7%, with revenue between 21.8 billion euros and 22 billion euros. New orders fell 4% to 10.35 billion euros in the first half, while analysts had forecasted sales of 10.35 billion euros and orders of 9.02 billion euros.

CEO Patrice Caine attributed the sales increase to defence and avionics activities. Thales anticipates revenues exceeding new orders this year and an adjusted operating margin of 12.2% to 12.4% for the full year.

Shares of the Paris-based company have risen 78% this year, boosted by increased military spending in Europe post-Russia’s invasion of Ukraine. French President Macron pledged to double defence spending by 2027, supporting Thales’ business momentum.

Thales is closely monitoring trade tensions, particularly on civil businesses. CFO Pascal Bouchiat stated U.S. tariffs would have limited operational impact, estimating a potential hit of “several tens of millions of euros” in 2025 if reciprocal duties were imposed between the U.S. and Europe.

Thales is well-protected from tariffs, with more than half of revenue coming from defence, exempt from such duties. The group’s “multi-domestic” structure limits cross-border flows, minimizing tariff exposure involving aerospace repairs and bank card exports.

Bouchiat mentioned the group could shift bank card production from Mexico to other facilities like Singapore if tariffs on Mexico increased significantly. Thales remains prepared to navigate potential tariff impacts through alternative import schemes.

Read more at Yahoo Finance: Thales raises 2025 sales growth forecast on strong defence demand