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By Tim Hepher
PARIS (Reuters) -Defence and technology company Thales promised investors growth in revenue and profits on Thursday, as global arms spending rises and Thales reaps benefits from a decade of investments in cybersecurity.
Europe's largest defence technology company, which has quadrupled cybersecurity revenues through acquisitions in recent years, said it aimed for 5% to 7% average annual growth to reach more than 25 billion euros ($26.40 billion) in revenue by 2028.
CEO Patrice Caine told reporters global defence spending is likely to rise for the next 10 years, while cyberattacks and privacy demands would propel cybersecurity, where Thales says it is already among the global top five.
"It is evident that the world has entered a cycle of higher investments in defence," Caine said.
He said it was too early to judge the impact of U.S. elections on Thales' broad portfolio from defence to civil aircraft. European nations are widely expected to boost defence spending while some civil markets face potential disruption from hawkish signals on sanctions from President-elect Donald Trump.
"If Europe wants to take a bigger role in (defence), it is more of an advantage than a risk for Thales," Caine said. "It is unlikely the (security) risks are going to be lower tomorrow".
Thales targets an operating margin of 13% to 14% in 2028, up from 11.6% in 2023 and the 11.7% to 11.8% it expects this year.
Thales held its first investor day since 2019, a period that has seen margins resume growth after dipping during the pandemic.
But shares in the France-based company gave up early gains to fall 1.5%, as some analysts said the forecasts, while broadly in line with expectations, were not bold enough.
Thales' military and civil products range from sub-hunting sonars to biometric identity systems for banks, and from satellites to seat-back entertainment systems for airlines.
Under Caine, who next month marks 10 years as CEO, Thales has shifted away from areas such as rail signalling to forge a leading role in cybersecurity after buying chipmaker Gemalto in 2019 and U.S. cybersecurity company Imperva in 2023.
SPACE 'RECOVERY MODE'
Caine set out a strategy to focus on customers prepared to pay a premium for high-grade data security such as banks and critical sectors such as energy, with relatively high margins.
Following its Imperva acquisition, Thales said it has the means to combine its traditional data-encryption toolbox with preventive measures to sniff out vulnerabilities in a network.