Company Reports

Dassault Aviation balances civil (37% of 2025 revenue) and defense (63%) activities. Its outlook is underpinned by a record EUR 46.6 billion backlog, improving business jet orders, and an expanding aftermarket base.

Dassault Aviation’s first-half sales rose 46% to EUR 4.16 billion, 25% above company-compiled consensus, while adjusted operating income rose 83% to EUR 330 million and margin reached 7.9%. Orders fell 64% on the India Marine comparison, but Falcon orders rose to 23 from 8.

Dassault Aviation balances civil (37% of 2025 revenue) and defense (63%) activities. Its outlook is underpinned by a record EUR 46.6 billion backlog, improving business jet orders, and an expanding aftermarket base.

Dassault Aviation sales grew 19% to EUR 7.4 billion in 2025, driven mainly by Rafale jet exports, adjusted operating income rose 22% to EUR 635 million, and the backlog reached EUR 46.6 billion, providing more than six years of revenue visibility.

Dassault Aviation balances civil (37% of 2025 revenue) and defense (63%) activities. Its outlook is underpinned by a record EUR 46.6 billion backlog, improving business jet orders, and an expanding aftermarket base.

European defense stocks rose on Jan. 8 after President Donald Trump called for a roughly 66% increase in the 2027 US defense budget, alongside renewed geopolitical risk from Washington’s rhetoric on Greenland.

Dassault Aviation maintains a portfolio balanced between civil (38% of 2025 revenue) and defense (62%) aviation. Its outlook is supported by a record defense backlog, early signs of recovery in business jet demand, and a growing aftermarket base.

Reports of the US-driven Russia-Ukraine peace deal triggered a downturn in European defense stocks, with names under our coverage down between 10%-20% since October highs.

European defense stocks fell sharply after US President Donald Trump met with Russian President Vladimir Putin in Alaska and with Ukrainian President Volodymyr Zelenskyy in Washington. Markets linked the selloff to media reports of a potential ceasefire and US-led deals.

Dassault reported EUR 8.1 billion in orders (up 57% versus the previous year), EUR 2.8 billion in sales (up 12%), and EUR 1.5 billion in free cash flow for the first half of 2025. Falcon orders fell to eight aircraft from 11 last year, while Rafale exports drove backlog growth.

NATO set a new defense spending target of 5% of GDP, with 3.5% allocated to core defense and implementation shifted from 2032 to 2035. The agreement places renewed emphasis on European joint procurement as part of a broader push for defense integration.

On June 13, Israel launched a series of strikes against Iranian facilities and personnel targeting its nuclear enrichment and armament programs. Shares of global defense contractors appreciated as much as 4% in early trading in reaction to the news.

We've raised our fair value estimate for Dassault Aviation to EUR 334 per share from EUR 227 to reflect the revised fair value estimate for Thales (26% owned by Dassault), the confirmed Indian Navy order for 26 Rafale Marine jets, and stronger long-term assumptions on production ramp-up and export share. We now assume Dassault reaches a steady Rafale production rate of three per month by 2027 and four per month by 2029, supported by the Indian Navy order and broader export momentum. Deliveries are projected to rise from 25 aircraft in 2025 to 36 by 2027. The Rafale F5 standard, expected to enter service by 2030, will integrate manned/unmanned teaming, enhanced sensors, and networked capabilities, strengthening the platform’s export competitiveness and bridging the transition to the Future Combat Air System.

Dassault Aviation maintains a portfolio balanced between civil (36% of 2024 revenue) and defense (64%) aviation. Its outlook is supported by a record defense backlog, early signs of recovery in business jet demand, and a growing aftermarket base.

While it is still too early to fully assess the implications of the proposed tariffs on the defense sector, it's important to consider the US' role in the global defense trade. The US remains a net exporter of military equipment, accounting for roughly 43% of global arms exports between 2021 and 2023 (based on SIPRI TIV data), while representing just 3% of global arms imports over the same period. Although the US defense industry is largely self-sufficient in end-product manufacturing, it remains exposed to risks tied to critical raw material imports—such as gallium, yttrium, and tantalum—which are vital for systems like fighter jets, helicopters, armored vehicles, and precision munitions.

The recent US negotiations with Canada and Mexico have set a precedent for how the European Union might handle its tariff disputes with President Donald Trump. His temporary pause on these tariffs, influenced by concessions on border security, reflects the transactional nature of his foreign policy. This dynamic is now playing out in the EU-US relationship, where the threat of tariffs is intertwined with demands by Trump for NATO allies to spend 5% of gross domestic product on defense, far above the organization's 2% target.

Despite initial concerns before the US election about the hit to European defense companies if Donald Trump was re-elected president, since his victory market reaction has been positive with share prices increasing 2% on average. We agree with investor confidence.

Dassault Aviation maintains a healthy balance between its civil (30% of revenue) and defense sector (70% of the revenue). We believe the firm has a positive outlook, supported by a strong defense order backlog, potential for a recovery in business jet market share, and steady aftermarket business.

Wide-moat Dassault reported a mixed set of results. While defense orders remain strong, Falcon orders saw a slight decrease, and supply chain issues continue to impact deliveries. However, Dassault reported an increase of 21% in available cash from EUR 7.3 billion at the end of 2023 to EUR 8.8 billion by the first half of 2024, mainly the result of advance payments received under Rafale Export contracts.

Wide-moat Dassault Aviation posted full-year revenue of EUR 4.8 billion with 13 deliveries for Rafale and 26 for Falcons, both below respective guidance of 15 and 35. Results were in line with our expectations, and we maintain our fair value estimate.