French defense and aerospace contractor Thales said it expects its operating margin to rise in 2026, leaning on surging European defense demand and a rebound in civil avionics as the company pushes deeper into a multi-year production ramp-up.
The company reported 2025 revenue of €22.1 billion (about $23.9 billion), clearing the symbolic €20 billion mark after posting 8.3% organic growth—above its own expectations. Thales also logged record order intake of more than €25 billion (about $27.0 billion), building a backlog it says provides unusually strong visibility across its businesses.
Defense was the main engine. Thales tied the momentum to Europe’s rearmament—accelerated by the war in Ukraine and NATO pressure on national budgets—which is feeding demand for its radars, missile systems and onboard electronics. The group said it has invested in production capacity to absorb the jump in orders.
Thales targets a higher operating margin in 2026
For the current year, Thales said it is aiming for an operating margin between 12.6% and 12.8%, up from 12.4% in 2025. The increase may look incremental, but on more than €22 billion (about $23.9 billion) in annual sales, each tenth of a point translates into tens of millions of euros.
Thales described the improvement as part of a steady, multi-year climb in operating profitability. The company pointed to two drivers: higher defense volumes as European governments place “sovereign” orders, and a recovery in civil avionics as global air traffic catches up.
Record orders and a debt profile Thales says remains under control
Crossing €25 billion (about $27.0 billion) in 2025 orders puts Thales in a rare position for a French defense manufacturer: a backlog that supports sustained industrial workloads for years. That kind of visibility matters because it helps justify investments in factories, equipment and staffing.
On the balance sheet, Thales reported total financial debt of €6.4 billion (about $6.9 billion) at the end of 2024, down from €6.98 billion (about $7.5 billion) at the end of 2023. The company said most of that debt is denominated in euros, limiting currency exposure, and that bond maturities are spread out through 2031 without a risky concentration in any single year.
Thales also said it spends €4.5 billion a year on research and development (about $4.9 billion), focusing on artificial intelligence, cybersecurity, quantum technologies and cloud services for “critical” environments—capabilities that can shape export competitiveness as government buyers increasingly compare technology, not just price.
85,000 employees and a defense production ramp tied to European rearmament
Thales employs more than 85,000 people across 65 countries. France remains the company’s industrial core, but Thales said its geographic footprint has broadened, with major regional operations in Australia, the United Kingdom, the United States and Saudi Arabia now weighing on consolidated results.
Higher defense production rates require hiring, training and capacity investments—steps Thales said it has been taking since 2023 alongside rising European military budgets. The company cited France, Germany, the Netherlands, Poland and Australia among active customers over that period.
On workplace goals, Thales set a 2026 target for management parity: 75% of leadership committees should include at least four women. At the end of 2024, 61.5% of committees met that threshold, up from 52.6% a year earlier. Thales also said women held 21.1% of “high responsibility” roles at the end of 2024, in line with a path toward 22.5% by the end of the year.
Cybersecurity and AI: a less visible business with growing strategic weight
Beyond conventional defense and aerospace, Thales said it published its annual report on malicious bot threats in June 2026, warning that AI-powered automated attacks increased 12.5 times in a year based on data compiled by its threat research teams. The company said generative AI now enables bots that can evade traditional detection, exposing APIs and critical digital infrastructure to new risks.
Thales said its cyber business—less headline-grabbing than big-ticket radar or naval contracts—still matters to valuation and to access to the most sensitive government markets. Customer states increasingly want integrated offerings spanning sensors, communications and data protection, and Thales positioned itself as one of the few European industrial groups covering that full chain.
Thales shares trade on Euronext Paris under the symbol HO. The company noted that its market value can be sensitive to revisions in organic growth expectations, pointing to a recent session in which the stock fell more than 6% after a release analysts viewed as disappointing on that metric.
