Thales CEO says European defence capacity tied to orders

PARIS(Reuters) - Europe has the technology to assure its own defence but its ability to fill any gaps left by transatlantic tensions will depend on the extent to which political declarations turn into firm defence orders, the head of France's Thales said.

European leaders agreed at a weekend summit that they must sharply increase defence spending to show U.S. President Donald Trump that the continent can protect itself.

"Does Europe have the necessary technology to produce the full spectrum of defence equipment that it needs? The answer is yes," Thales CEO Patrice Caine told reporters, adding that France already supplied virtually all its own military needs.

But Caine, who leads France's largest defence electronics group, said industrial capacity would track actual demand.

"Production capacity adjusts naturally to the level of contracts. It is more a question for buyers, governments and armies. Will the declarations be backed by extra contracts?," Caine told reporters after posting annual Thales results.

In November, Thales predicted average like-for-like sales growth of 6% to 7% in defence between 2024 and 2028.

After hosting the weekend summit, Britain on Sunday announced an order for 5,000 lightweight multirole missiles (LMM) from Thales UK for Ukraine, saying this would treble production at its Belfast factory. That follows an order for 650 of the air defence missiles for Ukraine last September.

"For Thales it represents the equivalent of about one year of revenues generated in Britain," which are about 1.5 billion pounds a year, Caine said.

Thales said it is in the process of tripling capacity for defensive radars as well as equipment for the Rafale warplane, while quadrupling the capacity for effectors or the core armament of a missile or weapons system excluding its sensors.

(Reporting by Tim Hepher; Editing by Benoit Van Overstraeten)

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