Thales specifies the effects of the termination of the F126 program and increases several of its objectives for 2026

Thales has outlined the repercussions stemming from the cancellation of the F126 frigate program and the subsequent adjustments to its 2026 objectives.

• Thales plans to record an exceptional charge related to the end of the F126 program.
• This charge will have no effect on the Group’s Adjusted key performance indicators.
• Thales is increasing its order intake and cash generation targets for 2026.

Update on the cancellation of the German F126 frigate program

Thales acknowledges the German Ministry of Defence’s decision, announced on 24 June 2026, to terminate the contract for the six F126 frigates program, wherein Damen Schelde Naval Shipbuilding (DSNS) served as the prime contractor and Thales was a sub-contractor.

Selected by DSNS in November 2020, Thales was tasked with supplying radars, sensors, combat management systems, fire control systems, and integrating the combat platform for this program.

The German Ministry of Defence’s conclusion to cease the F126 program marks a significant turnaround.

Thales is currently evaluating the implications of this decision in collaboration with its project partners and relevant authorities. Following the termination of this program, the Group anticipates registering an exceptional and predominantly non-cash charge of approximately €450 million in the first half of 2026. This figure primarily accounts for costs already incurred by Thales to facilitate project progress and a conservative forecast regarding financial compensation to be received.

This charge reflects the unusual nature of this contract, attributed to the intensified execution challenges encountered by DSNS in 2025, which led to a recently lowered financing profile. Such a situation is entirely exceptional within the context of the Defense contracts managed by the Group.

Due to its exceptional character, this charge will not influence the Group’s Adjusted EBIT and Adjusted Net Income. However, it will impact the Net Income, Group Share, by around €350 million in the Group’s first-half 2026 consolidated statements. Notably, this charge will not significantly affect the Group’s free operating cash flow.

The cancellation of this program will have a minimal effect, representing about 0.5% of the Group’s sales in 2026 and less than 1% annually in subsequent years. Given that the operating margin of this program is substantially lower than the Group’s overall margin, its termination will yield a marginally positive impact on the Group’s Adjusted EBIT margin.

Thales intends to assert all rights to seek compensation for the work completed under this project and for any damages incurred due to the program’s cancellation.

Positive outlook with upgraded targets for 2026

Thales’ Defence operations continue to thrive, benefiting from robust market momentum, strong visibility, and a portfolio of unique solutions aligned with the evolving operational needs of its clientele.

Consequently, Thales is revising its order intake and cash generation targets for 2026, which include:

• An expected book-to-bill ratio now exceeding 1.10, an increase from the previous target of above 1.0.
• A higher cash conversion rate, now anticipated between 100% and 110%, improved from the earlier range of 95% to 100%.

Thales has also reaffirmed its sales and profit goals for 2026, with expectations of:

• Organic sales growth between +6% and +7%, translating to sales between €23.3 billion and €23.6 billion.
• An Adjusted EBIT margin projected between 12.6% and 12.8%.

These projections are based on the June 2026 scope and average foreign exchange rates for the first half of the year, assuming an average EUR/USD exchange rate of 1.18 for the remaining nine months of 2026.

About Thales

Thales (Euronext Paris: HO) is a global leader in advanced technologies across Defence, Aerospace, and Cyber and Digital sectors. The company’s innovative products and services aim to tackle significant challenges related to sovereignty, security, sustainability, and inclusion.

The Group invests €4.5 billion annually in Research and Development in key areas, particularly focused on critical environments like Artificial Intelligence, Cybersecurity, Quantum, and Cloud technologies.

With over 85,000 employees across 65 countries, Thales recorded sales of €22.1 billion in 2025.

For additional information, images, and updates related to Thales and its Defence, Aerospace, and Cyber & Digital activities, please visit the Thales Media Library. For specific inquiries, the Media Relations team can be contacted.

Contacts

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Source: Thales Group (2026-07-03 15:53:07)