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Thales details plans for integrating Gemalto biometrics and digital identity business

Thales details plans for integrating Gemalto biometrics and digital identity business

The integration of Gemalto into Thales “Digital Identity and Security” (DIS) will result in average organic sales growth of four percent to six percent between 2020 and 2023, according to an update delivered at Thales 2019 Capital Markets Day. The expertise added in digital identity and biometrics, IoT secure connectivity, and data protection and encryption are notes as key enhancements to Thales portfolio.

The company set out its plan for DIS following the integration of Gemalto with other digital businesses previously part of its “Defense & Security” segment, and updated its financial objectives for the medium term. The EBIT (earnings before interest and taxes) margin for DIS is forecast to reach between 12.5 and 13.5 percent by 2023, while the group also adds significant synergies across other operating segments. High-value opportunities identified for the DIS group in the update include embedded SIM software and services, cloud data protection, public and commercial biometrics, and secure IoT connectivity for critical industrial applications, as well as value maximization of its mature smart card business.

Cost synergies could reach €120 million (US$131.6 million) on a run-rate basis by 2022, according to the announcement.

Thales Chairman and CEO Patrice Caine expressed satisfaction that many development opportunities have arisen from the acquisition, and says the company has progressed with its “Ambition 10” strategic priorities.

“We are continuing to implement operational performance initiatives and are accelerating our R&D investments. The results for both 2018 and the first half of 2019 were ahead of the dynamics needed to deliver on our 2021 targets,” Caine comments. “Our new ‘DIS’ global business unit is already the world leader in the fast-growing digital identity and security markets, addressing key challenges in the digital transformation of our customers’ intelligent systems. Across the whole Group, our teams have identified many business synergy opportunities that will generate several hundred million euros in revenues by 2023. In a more uncertain economic and geopolitical environment, we are initiating this new growth phase for Thales with a robust balance sheet and enhanced resilience thanks to a broader customer base and a technology portfolio that has been strengthened with regard to critical capabilities.”

Caine also suggests that the company’s “technology portfolio and deep domain knowledge” within its five main markets will enable sustained profitable growth.

Application opportunities for the group include pooled cybersecurity capabilities, airport solutions design, large cities and critical sites, surveillance and UAV management, and IoT implementations for the military and rail signal systems.

A group including Gemalto was recently awarded a contract to produce 15 million biometric passports over the next seven years for Thailand.

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