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Leadership / Digital Transformation

Thales Freezes IT Spending, Agrees New €2 Billion Credit Line

French multinational defence and infrastructure giant Thales has gone into an enterprise lockdown as it enacts what it calls a “global crisis adaptation plan” to defer spending on non-critical investments — including IT projects.

One of the areas it has deemed non-critical is R&D: a department which received over €1 billion in funding in 2019. Thales cites IT as non-critical investment, but does not go into details on what projects precisel will be deferred.

The company has also agreed a new €2 billion syndicated credit facility that it can tap any time over the next 12 months, with a six-month extension option

Detailing the move Thales CEO Patrice Caine wrote : “This crisis is currently seriously disrupting production chains and project execution…

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He added: “The measures implemented to limit the spread of Covid-19 have a significant impact on the Group’s production, project execution, supply chain and customers’ ability to take delivery of products and systems”.

The CEO said the company had a “very robust financial position” however and noted that “direct exposure to the most affected markets is limited.”

The firm currently employees more than 80,000 staff across numerous global sites. Some of those staff will now be able to access paid leave, but the group is going to implement a “sharp reduction” in temporary work and implement a hiring freeze.

It also implementing these steps to help reduce the financial burden and risk caused by COVID-19;

  • Maintaining the continuity of critical and strategic client services, followed by a gradual resumption of operations;
  • Coordination of actions within every supply chain, in particular to avoid supply disruptions, for example within the framework of GIFAS in France;

In 2019 Thales’ order intake was $19.1 billion (£16.8) billion.

In the three years running up to 2019 the firm recorded growth above 5 percent. That growth slowed last year due a downturn within the space industry.

At the end of 2019 Thales reported €1.3 billion (£1.2 billion) in free operating cash flow. However due to high value purchases and lease debts the firm had a net cash debt total of €3 billion. In order to boost its liquidity the firm has signed a €2 billion syndicated credit facility. (One of the largest contributors to its net cash debt in 2019 was Thales’ acquisition of digital security company Gemalto for €4.8 billion.

Read More: Thales Closes €4.8 Billion Gemalto Deal, Pledges Aggressive Global Expansion

UK Orders

Since 1994 and its work on the Docklands light railway, Thales has been involved in an array of UK transportation projects.

In 2019 it undertook extensive work to modernise signalling on four London Underground lines. Working on the Circle, District, Hammersmith & City and Metropolitan lines the firm employed a workforce of more than 400 engineers. That work helped to boost the number of trains on the circle line to 32 every hour, which increases the lines capacity by 33 percent.

It also recently won the bid to build the “digital heart” of five UK frigates and provide them with a modern combat and communication systems costing an average of £250 million per ship.

The vessel Arrowhead 140 will become the UK’s Navy’s newest class of warships; due to take to the seas in the year 2023. Construction of the frigates is expected to involve a workforce of 1,250 highly skilled workers. Thales is fitting the ship with a TACTICOS combat management system. These systems let an actor set up secure internet access and communication between allies and can quickly identify anomalous behaviour or odd traffic trends. It also builds 3D training simulations that can also be used to gauge combat effectiveness.

Read this: New UK Frigates to Get an Open Architecture “Digital Heart


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CBR Staff Writer

CBR Online legacy content.