(AOF) – Thales and Hitachi have announced that they have made significant progress towards finalizing the sale of the former’s ground transportation systems (GTS) business. The two groups have obtained most of the regulatory approvals necessary to complete the transaction. Over the past few months, the parties have held constructive discussions with the European Commission’s Directorate-General for Competition regarding this transaction. Following these discussions, Hitachi Rail resubmitted its notification proposal to the European Commission.
The two Groups continue their conversations with the interested authorities to finalize this transaction during the first half of 2024.
Hitachi Rail is also awaiting an upcoming decision from the UK Competition Authority (CMA) on its latest proposal.
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Key points
– First or second in electronics for civil satellites, mission systems and sensors for defense, air traffic management, data protection and SIM cards and smart payments, created in 2020;
– Revenue of 17 billion euros from defense and security (54%), aerospace (28%), digital identity and security (19%) and civil aeronautics (7%).
– International presence, 24% for France, 29% for other European countries, 14% in Asia, 12% in North America and 9% in the Middle East;
– Business model based on 4 pillars: the strength of R&D, with 20% of sales, synergies between businesses extracted from a deep knowledge of the market, an extensive base of digital assets and a global presence in +50 countries ;
– Capital blocked by 2 common shareholders, Dassault Aviation (24.63%) and the French State (25.68%), Patrice Caine is president and CEO of the 16-member board of directors;
-Healthy financial situation with A- rated debt, significantly reduced to 894 billion euros at the end of June against 7.6 billion euros of capital.
betting
– Strategy to refocus on aerospace, defense and security and digital identity and security;
– Innovation strategy supported by R&D close to 20%:
– global ecosystem that brings together 1/3 of the workforce, with a portfolio of more than 23,000 patents, 6 centers, 3 digital factories and 50 academic associations;
– focus on five digital competencies: connectivity, offer data, cybersecurity and artificial intelligence, through the AI@Centech program and the TrUE AI quantum approach;
– Low carbon environmental strategy:
– 25% reduction in direct CO2 emissions in 2023, 50% in 2030 (compared to 2018) and net zero goal in 2040,
– 100% eco-designed products and services by 2023,
– green loan launches,
– 4 priority areas: environmental management, flight optimization, air traffic management, training and signaling;
– Acceleration of activities, obtaining contracts and investments in defense and security (2/3 of the estimated benefits) and aerospace (15%);
– Acquisitions of Excellium and S21sec (security division) and AAC (sonars);
– Visibility with a record order book, increased by the entry into force of Rafale sales in the United Arab Emirates and, more generally, by Defense and Security needs.
Challenges
– Stresses in supply chains, particularly semiconductors and inflation: resilience of supply chains, increased hiring and transfer of purchasing costs to customers;
– Benefits derived from advances in avionics and biometrics with the resumption of air traffic and then investments in R&D in quantum sensors, cloud security and IoT data processing;
– Lower aerospace order rate than the group;
– After a 41% increase in order intake and a 9.6% increase in revenue at the end of September 2022, the objectives for 2022 were confirmed: turnover close to 5.5% and operating margin of 10.8 at 11.1%.
– 2022 interim dividend of €0.70 paid in December and share repurchase.
The end of a duopoly?
For several decades, the American Boeing and the European Airbus have shared 99% of the world market for passenger aircraft with more than 110 seats. This market is worth more than 100 billion dollars a year. However, this duopoly appears weakened in 2022 for several reasons. First, for the first time, two medium-range single-aisle aircraft, the C919 from China’s Comac and the MC-21 from Russia’s Irkut, are preparing to enter service. Added to this is the Boeing 737 MAX crisis. With the cessation of deliveries of this aircraft between 2019 and 2021, the production balance has been disrupted. In 2021, Boeing recorded 340 deliveries, while Airbus continues to lead, with 611.
