Europe's largest defense electronics group Thales, posted full-year operating profit that beat expectations as it renegotiated contracts and cut non-restructuring costs, confirming a forecast for rising margins and revenue this year.
Earnings before interest and tax rose to EUR€749 million (USD$991 million) last year, against a loss of EUR€92 million a year earlier.
"Although the economic environment worsened more markedly than expected, particularly in defense, our order intake increased and our revenues held up well," chief executive Luc Vigneron said in a statement.
"We are confident in our ability to continue to improve our results, despite the serious economic uncertainties in Europe."
Thales confirmed its target for an operating margin of 6 percent this year, up from 5.7 percent in 2011.
The group said last month that 2011 revenue slipped 1 percent to EUR€13.03 billion, while order intake rose 1 percent to EUR€13.21 billion.
The state-controlled French group makes cockpit systems and in-flight entertainment panels for airliners and military hardware including drones.
It also builds the radar for the Dassault Aviation Rafale fighter jet, which scored a breakthrough by emerging as preferred bidder in a contest in India earlier this year. Dassault owns 26 percent of the group, and the state 27 percent.
A surge in civil aerospace demand on the back of large aircraft orders at key clients Airbus and Boeing has been compensating for weaker defense and security revenue resulting from budget pressures in Europe.
The company forecast that its book-to-bill ratio would be slightly below 1 this year as new orders lag rising revenue. This excluded any major contract for the Rafale.
"The budgetary situation of the group's main customers leads Thales to expect a decrease in defense orders in 2012 - excluding any exceptional export contract - which is likely to be only partially offset by the increase in commercial orders, primarily in aeronautics and ground transport," Thales said.
Thales CEO Vigneron told analysts the company was on track with its plan to save EUR€1.3 billion in costs by 2014.
The company added that it would propose a dividend on 2011 results of 0.78 euros a share. An interim dividend of 0.25 euros a share was already paid in December.