Pensions weighing down
I keep saying that the very pillar upon which economy stands are device of old. You buy a share today, you're buying; de facto, a debt to its employees.
Now firms that prospering are in countries that? Yes, have not that burden of pension liabilities that Europe, US and Japn do. That's what explains the advantage of the countries with low cost production.
Thales sticks to forecasts but profits drop
By Friederike Tiesenhausen Cave in London
FT.com site; Sep 15, 2003
Thales, the French aerospace and defence group, on Monday stuck by its growth forecast for the year despite a drop in first half profits after taking a charge for its UK pension commitments.
Net income for the six months to June 30 fell 58 per cent to €37m ($42m) from €88m a year earlier as a result of pensions and restructuring charges that were more than double the amount in the same period in 2002.
But on the back of an almost stable operating profit, France's flagship defence contractor said it expected full-year sales and operating income to grow as a result of a steady performance of its defence activities.
However, the group warned that "due to the unfavourable business environment for part of its civil businesses, the level of growth was likely to remain limited".
Analysts welcomed the strength of Thales' defence activities, the group's main business area, where operating margins improved to 8.4 per cent from 8.1 per cent. "The 24 per cent increase in first-half defence orders is already very attractive," said Harald Liberge-Dondoux at Aurel Leven. "And we think that they are going to benefit more from the weakness of the euro when it comes to exports."
However, he cautioned that there was slight disappointment that the group did not perform better in its civil aerospace, IT and services divisions, which contributed to a 8.5 per cent fall in nominal sales at €4.56bn from €4.98bn in the first half. At stable exchange rates, the decline would have been 3.5 per cent. "We expected more encouraging updates from their civil activities," Mr Liberge-Dondoux said.
Although the scale of the €43m pension provision surprised many observers, Antoine de Montille at Dexia Securities said: "It is positive news that they are addressing their pension liabilities in the UK now."
Earlier than many of its French peers, Thales decided last year to calculate pensions and related costs in accordance with international accounting standards.
Shares in Thales closed down 2.8 per cent at €24.96 in Paris. |
