PARIS (Reuters) – French defense group Thales has reaffirmed its full-year financial projections. It reported a 1.4% drop in underlying sales for the third quarter, dampened by comparisons to the easing of a COVID-19 lockdown a year ago.

This maker of radars to fighter aircraft and control towers as well as biometric identification systems reported that there was a 9% increase in quarterly orders. Its satellite business led the recovery and an overall 9% rise in commercial flight.

Thales Aerospace saw a gradual recovery in domestic and short-haul air travel, which helped propel its Aerospace unit sales up by 4% during the third quarter. Meanwhile, Thales’ ‘Digital Identity and Security division also saw a rise in traffic as people travel more after being forced to avoid flying in the aftermath of the pandemic.

Pascal Bouchiat Chief Financial Officer stated that recovery for the long-term will require much more time.

Thales group sales fell 1.4% to 3.555 Billion Euros ($4.1B) in the third quarter due to an unfavorable comparison to the previous year. However, new orders increased by an underlying 9.9% to 2.992 Billion.

Thales stated that it is continuing to execute the sale of its GTS rail signalling business to Japan’s Hitachi after it announced advanced negotiations in August. This proposed deal would value the division at 1.66 million euros.

The company stated that on Tuesday it was expecting to reach a final agreement within the first quarter in 2022. To remove the unit, the numbers 2020 and 2021 of the group have been adjusted.

Thales projects 2021 sales at 15.8 to 16.3 billion euro based upon its August 2021 structure and an operating margin 9.8%-10.3%. Orders will top revenue.

Paris-based firm, which holds 35% of France’s Naval Group military shipyard state, has reiterated that it didn’t expect a substantial financial impact on the cancelation of its contract to supply Australia French submarines.

Australia said last month it was ending a $40B deal with Naval Group to supply submarines. It will instead construct at least eight submarines powered by nuclear energy using British and U.S technology.

Uncertain if Thales would still be able to acquire any replacement subs business via its UK presence.

Bouchiat stated that it was too soon to know what a submarine contract might look like and whether or not our activities would be affected.

Bouchiat, when asked about the widespread concern about increasing labour shortages or logistical bottlenecks in their country, said that Thales was facing “a fight for talent” with many companies.

While he did not observe any supply chain problems, the company was still affected by a shortage in semi-conductors. The company hopes to make up the difference during the fourth quarter.

($1 = 0.8593 euros)