Thales SA reported fourth-quarter results Tuesday that surpassed analyst expectations, fueled by robust performance in its Aerospace and Defence segments, even as its Cyber & Digital business struggled. The French defence and aerospace giant posted full-year 2025 adjusted EBIT of €2.74 billion, a 13.3% increase from 2024. Second-half adjusted EBIT of €1.49 billion also exceeded forecasts by 3%. Full-year sales reached €22.1 billion, up 7.6% year-on-year and 8.8% organically, comfortably above the company's initial 5-6% guidance.

Free operating cash flow surged 27% to a record €2.577 billion, reflecting a strong 128% conversion ratio from adjusted net income. This cash generation stemmed from both order advances and significant inventory optimization, delivering a €724 million working capital benefit. Chairman & CEO Patrice Caine declared 2025 'a very good year' as the group successfully pursued its profitable growth strategy. For 2026, Thales guided organic sales growth of 6-7%, targeting revenue between €23.3 billion and €23.6 billion, aligning with consensus.

The company expects an adjusted EBIT margin of 12.6-12.8%, slightly below the 12.8% consensus. Free cash flow is projected to moderate with a 95-100% conversion ratio. The Defence segment delivered €12.2 billion in sales, up 11.5% year-on-year, while Aerospace rose 8% to €5.9 billion. Cyber & Digital sales fell 4.3% to €3.9 billion, though the company expects gradual recovery in 2026 post-Imperva integration.

Thales proposed a €3.90 per share dividend, representing a 40% payout ratio.