UPDATE 3-Thales posts higher profit, tackles weak telecom satellite market

(Adds analyst comment in paragraph 6)

PARIS, March 5 (Reuters) - France's Thales on Tuesday unveiled higher than expected sales, cash and profits for 2023, pushing its shares sharply higher despite becoming the latest aerospace player to feel pressure in the oversupplied satellite business.

Operating profit rose by an underlying 11% to a record 2.13 billion euros ($2.31 billion) - topping 2 billion euros for the first time since before the pandemic in 2019. Sales rose 8% to 18.43 billion euros, while the operating margin stood at 11.6%, up 0.6 percentage points.

Analysts were on average expecting 2023 operating profit of 2.11 billion euros on sales of 18.18 billion, according to a company-compiled consensus.

Shares in the supplier of civil and military radar and digital identity systems as well as satellites, rose more than 7%. Thales said its order intake was fractionally higher than the year before at 23.13 billion euros.

For 2024, Thales predicted like-for-like sales growth of 4% to 6% to reach between 19.7 billion and 20.1 billion euros. It predicted an operating margin of 11.7% to 12% and said new orders would continue to outstrip revenues.

"Avionics continued to perform well, but Space remains challenging," Bernstein analysts said.

The company said it would cut about 1,300 jobs at Thales Alenia Space amid "structurally weaker demand" in commercial telecoms, and that these workers would be redeployed within the group. Some 1,000 of the affected jobs are in France.

CEO Patrice Caine said there would be no forced departures as Thales tries to keep skills in-house.

The move comes as the market for large satellites in geostationary orbit - once representing some 20 satellites a year - now stands at around 10 a year, Caine said. Traditional satellite firms face growing competition from the rapid growth of constellations of small satellites.

"So the market has more or less been divided in half ... and we have to re-adapt; there's no mystery," he told reporters.

The business affected by the changes represents about one-third of Thales Alenia Space, equivalent to 700 million euros in turnover, or 4% of the group's total, he said.

The shake-up comes weeks after Airbus, Europe's other major producer of large satellites, unveiled a fresh charge for its troubled space business.

Caine played down suggestions that Thales could buy all or parts of BDS, the cybersecurity branch of ailing French IT company Atos that Airbus has offered to buy for 1.5 billion to 1.8 billion euros, but stopped short of ruling anything out.

Atos was thrown into new uncertainty last month after talks with Czech billionaire Daniel Kretinsky over the sale of another part of the business - that would have provided urgently needed cash - collapsed.

"Our position has been unchanged for months and months", Caine said, adding that Thales had already made other acquisitions in the cybersecurity sphere including that of Imperva. "We are concentrating on those subjects, so no change".

($1 = 0.9216 euros) (Reporting by Tim Hepher; Editing by Kim Coghill and Mark Potter)