Thales has in fact not escaped the crisis which is hitting the sector hard. It is shaken in particular by the emergence of SpaceX’s Starlink constellation of satellites in low orbit and by the collapse of the market for telecommunications satellites in geostationary orbit. This led Thales to announce, last March, that the joint company with the Italian Leonardo, Thales Alenia Space, would have to cut 1,300 positions, including nearly a thousand in France, by 2025. For its part , Airbus is counting on a reduction of 2,500 positions.
A market divided by two
This reduction in the workforce should contribute to improving the profitability of space activities, according to Thales. In 2018, before the sector crisis, Thales’ operating margin in space stood at 8%. The group therefore expects profitability to be restored in around ten years. A speech that goes down badly with trade union organizations. These, highlighting a heavy workload until the end of 2026, criticize job cuts, half of which are justified “only to achieve a record level of profitability».
On the management side, however, we mainly highlight a drop in orders. “The telecommunications satellite market has been halved, so we must adapt to the reduction in its size», noted Patrice Caine. No layoffs in sight, however, the group says it wants to keep its skills. “In France, the entire workforce concerned will be redeployed within the group, as we did with aeronautics at the time of Covid», Specified the CEO of Thales. Clearly, most positions will be redirected towards growing activities, defense in particular.
Promising segments
If the space sector is marked by a crisis in telecommunications satellites, other segments seem much more flourishing, auguring lucrative future contracts for Thales. Especially since the telecoms segment only represents around a third of the turnover of the group’s space activities. “The majority of our contracts are carried out with large institutions and their needs will remain very important in the years to comewanted to remind Patrice Caine. This is also true in the field of military space applications, where there is a constant need for new applications.»
Among the opportunities that are attracting attention: Iris², the internet satellite constellation project, for which the European Commission gave the green light at the end of October. Despite its delay in starting, this program launched in 2022 constitutes a major sovereignty issue for Europe, able to stand up to constellations such as Starlink and Kuiper, that of Amazon boss Jeff Bezos.
Further cost reductions in sight
«Iris² is a complex project, supported by very advanced technologies, so it is normal that it takes timepleaded Patrice Caine. We position ourselves as a simple satellite manufacturer. The ambition is not to reproduce what Starlink does, Iris² will consist of a system of multi-orbit satellites.» With Telespazio, another joint company with Leonardo, the strong growth in space services also promises to help push margins upwards.
Furthermore, Thales sees the possibility of reducing a certain number of costs within its space activities in the short term. “We are completing a cycle of significant investments in the new generation of geostationary satellites, called Space Inspire.said Pascal Bouchiat, the financial director of Thales. It represented a major investment and the development cycle will end in 2025, marking the end of associated expenses.» Another predictable cost reduction factor: a number of satellite contracts over the 2022-2023 period were signed at fixed prices, therefore not taking into account high inflation. A factor now taken into account.
Exploratory discussions with Airbus
To further strengthen its space activities, will Thales have to join forces with another manufacturer, enough to quickly gain critical size? For several months, rumors of a possible merger with Airbus, the two largest satellite manufacturers in Europe, have been swirling. “We have seen rumors appear about exploratory discussions, I am not going to comment on themreplied Patrice Caine. I am not going to base our strategic plan on elements which are at this stage still exploratory. But I do not deny that these discussions exist.»
If space represents the stone in the shoe of the high-tech group, the other activities – defense, aeronautics, cybersecurity and digital – should all experience strong growth in the coming years. Enough to allow Thales to count on a turnover of more than 25 billion euros in 2028, compared to 18.4 billion euros in 2023. As for the operating margin at the group level, it could be rise between 13 and 14% by this time, compared to 11.6% in 2023. Even the arrival of Donald Trump at the White House should not jeopardize these plans. This could even constitute a “source of opportunities”, in the words of Patrice Caine, highlighting the growing desire for greater European sovereignty.
Source: www.usinenouvelle.com
