France's Thales to Take Hit After Germany Scraps Frigate Program

(16:01 GMT) *Thales Specifies Effects of Termination of F126 Program (16:02 GMT) *Thales Acknowledges German Decision to Terminate Contract for Six F126 Frigates Program (16:03 GMT) *Thales: Decision Is Total Turnaround (16:03 GMT) *Thales Assessing Consequences of Decision (16:05 GMT) *Thales Plans to Record Charge of About EUR450M in 1H (16:05 GMT) *Thales: Amount Mainly Corresponds to Costs Already Paid for Project (16:06 GMT) *Thales: Charge Will Have No Effect on Adj EBIT, Adj Net Pft (16:08 GMT) *Thales: Charge Will Weigh on Net Pft by About EUR350M in 1H (16:08 GMT) *Thales: Charge Won't Have Any Material Impact on Free Oper Cash Flow (16:09 GMT) *Thales: Termination Will Have Impact of 0.5% on 2026 Sales (16:09 GMT) *Thales: Termination Will Have Marginally Positive Effect on Adj EBIT Margin (16:10 GMT) *Thales: This Is Because Oper Margin of Program Is Significantly Lower Than Margin at Group Level (16:10 GMT) *Thales: Comp Will Claim All Its Rights in Order to Obtain Compensation (16:11 GMT) *Thales: Defense Activities Continue to Benefit From Sustainable, Favorable Momentum (16:11 GMT) *Thales Raises 2026 Order Intake, Cash Generation Targets (16:12 GMT) *Thales Sees 2026 Book-To-Bill Ratio Above 1.10, Prior Above 1 (16:13 GMT) *Thales Sees 2026 Cash Conversion Rate Between 100% and 110%, Prior 95% to 100% (16:13 GMT) *Thales Confirms 2026 Sales, Profitability Targets (16:29 GMT) France's Thales to Take Hit After Germany Scraps Frigate Program

By Mauro Orru

French aerospace-and-defense group Thales said it would record a charge in the first half after Berlin scrapped a project to procure F126 frigates.

Thales said it would book an exceptional and mostly non-cash charge of about 450 million euros ($514.6 million). The company said that charge, which corresponds to costs already paid for the project, would harm net profit by about 350 million euros in the first half.

Dutch shipyard Damen Schelde Naval Shipbuilding was the prime contractor and Thales one of the sub-contractors. The company said it would seek compensation for the work carried out as part of the project.

Despite the hit to profit, Thales said its defense business continued to benefit from positive momentum and raised its order intake and cash generation targets for 2026. The company now expects a book-to-bill ratio above 1.10 compared with above 1.0 previously, and a cash conversion rate between 100% and 110% compared with 95% to 100% previously.

Write to Mauro Orru at mauro.orru@wsj.com