Thales Revenue is Flat, but Orders are Up

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PARIS — Satellite services and space-hardware supplier Thales Alenia Space reported flat revenue and a drop in pretax profit but a sharp increase in new orders for the six months ending June 30 compared to the same period a year ago, parent company Thales Group announced July 27.

Big new orders booked in the first half of 2009 include nine pressurized cargo modules for Orbital Sciences Corp.’s Cygnus space station resupply vehicle, a contract valued at 180 million euros ($255 million); and a 162.7 million-euro contract to build the W3B telecommunications satellite for Eutelsat.

Other contracts booked this year include the Sentinel 3 Earth observation satellite for the European Space Agency, and an updated contract to build 24 second-generation mobile communications satellites for Globalstar Inc. of Milpitas, Calif.

Globalstar and Thales Alenia Space officials had insisted that work on the satellites had not been abandoned, but only slowed as Globalstar sought additional financing that was secured July 1.

But Thales Chief Financial Officer Patrice Durand said in a July 27 conference call with investors that the Globalstar work had been “suspended for several months” before the new financing was made available. He said the contract had been subjected to a “temporary stop-work” order.

Thales Alenia Space officials say they can re-engage full production quickly enough to complete the 24 satellites in time for launches in 2010.

Paris-based Thales said its space business, which includes a 67 percent ownership of Thales Alenia Space and 33 percent of satellite services provider Telespazio of Rome, is meeting the expectations Thales set for it when it purchased the assets from Alcatel Lucent in April 2007.

Thales and Alcatel Lucent had agreed at the time of the purchase to review the sales price two years later to determine an adjustment based on the performance of the space business. Because Thales Alenia Space is performing well, Thales in May paid Alcatel Lucent a final purchase consideration of 129.6 million euros, Thales said.

In its July 27 presentation and supporting documents, Thales lumped together its 67 percent stake in Thales Alenia Space and the 33 percent Telespazio ownership.

Thales’ portion of the revenue of the two companies was 629 million euros for the six months ending June 30, down 1.2 percent from the same period a year ago but up 1 percent if the dollar-euro exchange-rate effects are removed. Operating income was 2.7 percent of revenue, compared to 3.8 percent of revenue a year earlier.

New orders, at 904.6 million euros, were up 30 percent over the previous year.

Durand said the April earthquake in L’Aquila, Italy, that destroyed much of a Thales Alenia Space satellite-component facility has “delayed billing on several programs,” although most of the completed components were salvaged before aftershocks made the plant too unstable to visit.

In addition to its Globalstar work, Thales Alenia Space has been selected as prime contractor for the eight-satellite O3B satellite broadband program. O3B continues to struggle to raise the needed financing. Durand did not mention O3B by name, but said “financing delays for constellations” has affected performance.