France’s Thales reported a 13% rise in defense revenue to €3bn in Q1, fueled by urgent orders from Middle Eastern clients amid the escalating Iran conflict. Finance director Pascal Bouchiat confirmed “urgent requests for weapons equipment” since the U.S. and Israel launched strikes against Iran, with deliveries expected to ramp up in mid-2026. The group highlighted growing demand for advanced air defense systems, including its new SAMP-T NG missile system—developed with Italy’s Leonardo and MBDA—as a potential rival to the U.S. Patriot system. Thales aims to capitalize on Gulf nations’ rapid adoption of American systems by accelerating its own deployments, though supply chain challenges may delay short-term gains.

The conflict’s ripple effects extend beyond immediate orders. Bouchiat noted long-term investments in “complete defense systems” across the Middle East and globally, citing heightened air surveillance and missile interception needs. However, Thales cautioned that heightened defense spending may not offset broader operational headwinds. Cyber revenue fell 4% due to reduced corporate spending, while aviation division profits dipped as geopolitical tensions spiked jet fuel prices, forcing airlines to cut capacity.

Underwater mine countermeasures emerged as a critical growth area, particularly in the Strait of Hormuz, where naval forces face heightened risks. Thales delivered new unmanned systems to British and French navies to combat mines, though this niche remains a small revenue stream. Bouchiat emphasized the Strait as a “wake-up call” for modernizing mine-hunting capabilities, signaling a shift in regional security priorities.

Thales’ shares fell 3% in Paris despite strong defense order growth, as mixed performance in non-defense sectors tempered optimism. The company plans to revisit its 2026 guidance by mid-year, balancing cautious optimism with logistical risks. Analysts suggest the Iran war could reshape global defense procurement trends, with Thales positioning itself to challenge U.S. dominance in Gulf markets.