Thales S.A.

Good morning, ladies and gentlemen, and thank you for standing by. Welcome to today's Thales H1 2023 results conference call. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, you will need to press star 1 1 on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today. I would now like to hand the conference over to Mr. Bertrand Delcaire, SVP, Head of Investor Relations. Please go ahead, sir.

Yes. Hello. Good morning. Welcome and thank you for joining us for the presentation of Thales' H1 2023 Reserve and Bertrand Delcaire, the Head of Investor Relations at Thales. With me today are Patrice Kane, Chairman and CEO, and Pascal Bouchard, CFO of Thales. As usual, the presentation is in English and will be followed by a Q&A session. It is webcast live on our website at thalesgroup.com. where the slides, press release, and consolidated financial statements are also available for download. A replay of the call will be available in a few hours. Before handing over the call to Patrice, let me share a brief personal note. This is my 30th and final quarterly results as head of investor relations at Sallet. It has really been an honor documenting the transformation of the group over the past seven years and engaging with investors and analysts globally. I will really miss the quality of our interactions over the years. I also wanted to take the opportunity to thank my team, Olivier, Florian, Sylviane, who played a major role in the design, production, and delivery of all these interactions. In a few days, I will be joining SIX, our Secure Communications and Information Systems Global Business Unit, which has remarkable teams and many growth opportunities. I leave you in good hands with Olivier, Florian and Alexandra, who will join the group in September. With that, I would like to turn over the call to Patrick Kane.

Good morning, everyone. So let's start with slide number two. As usual, the highlights of our robust H1 2023 results. So starting with the commercial dynamics, it was again strong across the portfolio. When you exclude the GEMBO UAE rafale booked in Q2 last year, the performance was actually in line with last year's record high. Over 12 months, from June 2022 to June 2023, our backlog is up by 7%, further increasing our long-term visibility. Secondly, our organic sales growth remains strong. driven by the ongoing recovery of the avionics business and the remarkable performance of DIS during the first quarter. Third, our EBIT margin, driven notably by the strong DIS performance, is in line with the full year guidance. Considering our year-to-date performance and the perspectives for H2, we have decided to upgrade our full year sales guidance And I will come back on this at the end of the presentation. And finally, of course, from a strategic perspective, we were very active in the first half, and I wanted in particular to mention the acquisition of Cobham Aerospace Communications that we announced last week. This acquisition will reinforce our position in cockpit connectivity This represents a perfect example of the larger Bolton acquisitions that we mentioned in the past. So let's move now to slide number three, looking at our financial performance in a few charts. At 8.6 billion euros, order intake was down 23% organically versus a very strong H1 2022. As mentioned, organic sales growth remained strong at 7.7% ahead of our full year guidance. EBIT and EBIT margin continued to improve strongly, respectively up 13% and 60 basis points. At 819 million euros, adjusted net income grew by 13%. It's a new record high for the first half. Free operating cash flow remains positive at 99 million euros, and Pascal will come back in detail on the explanation of the drop compared to last year. Last chart on the slide, the net debt position, which ended the half year at 781 million euros, down a little more than 100 million euros over 12 months.