Defense electronics company Thales said Friday it would take a €100 million (US $112 million) hit on 2014 operating profits due to an expected net loss of €300 million at naval shipbuilder DCNS.
Thales holds a 35 percent stake in DCNS, with the government owning 65 percent. DCNS contributed €40 million to Thales’ operating profit in 2013.
Expected losses at DCNS stem from a sharp rise in “costs to complete” on the Barracuda nuclear attack submarine and other naval programs, and also civil nuclear energy programs, notably the Jules Horowitz research reactor, Thales said in a statement.
The expected €300 million net loss for 2014 at DCNS follows a comprehensive review of the company’s programs, Thales said.
Excluding the negative impact from DCNS, Thales said its 2014 results would reflect “both stable order intake and sales,” and growth of 5 to 7 percent in earnings before interest and taxes.
Thales expects a “break-even contribution” from DCNS in 2015 and a recovery after this year, Chief Financial Officer Pascal Bouchiat of the defense systems company said on a conference call, Reuters reported.
The review of costs and programs follows the appointment last year of Herve Guillou as chairman of the naval shipbuilder.