By Matteo Allievi
(Reuters) -Shares in Spanish defence and technology firm Indra surged on Monday after its net profit rose 40% to 61 million euros ($66 million) in the first quarter, supported by strong orders as global tensions spur demand for air defences.
Shares in the company were up almost 10% at 0800 GMT, topping the blue-chip index, which remained flat.
Indra reported a net profit of 44 million euros in the same period one year ago.
After shrinking for decades, European military budgets are on the rise due to heightening tensions between major powers, which are set to lead to higher revenues and margins for defence groups.
NATO member countries have committed to ratchet up their defence spending to 2% of their gross domestic products in response to Russia’s full-scale invasion of Ukraine.
Indra’s revenue rose 22% to 1.12 billion euros from January to March, with all four of its divisions achieving double-digit percentage growth.
The company reiterated its year-end revenue target of more than 4.65 billion euros in local currency, announced in February.
“If the performance in the second quarter continues to be so favourable, we believe that the board will raise the targets,” Renta 4 analysts said in a note.
Indra is setting up a new space company as it aims to grow within the European military sector, where it competes with the likes of France’s Thales and Italy’s Leonardo.
($1 = 0.9295 euros)
(Reporting by Matteo Allievi; Editing by Tom Hogue, Mark Potter and Louise Heavens)
