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