UPDATE 1-France's Thales upgrades sales outlook after solid first half

(Adds details and comments from management)

PARIS, July 21 (Reuters) - France's Thales upgraded its full-year revenue forecast after posting faster-than-expected growth for the first half on Friday, buoyed by a recovery in civil aerospace and growth in its digital identity and security business.

Europe's largest defence electronics company, which also supplies civil avionics, satellites and identity systems, said its like-for-like mid-year sales rose 7.7% to 8.716 billion euros ($9.71 billion).

The intake of fresh orders fell 23% to 8.563 billion euros after a major order for French Rafale fighter jets, for which Thales builds radars, boosted the first half of 2022. Thales said orders excluding Rafale remained at around record levels, thanks in part to strong demand for ground-based defence radars.

First-half operating profit rose 13.1% on a constant basis to 993 million euros as margins rose to 11.4% from 10.8%.

Thales narrowed its forecast range for full-year sales growth to 5-7% from 4-7%, suggesting revenue of 17.9 billion-18.2 billion euros, and reaffirmed other financial targets.

GROUND TRANSPORT SALE TIMING

Chief Executive Patrice Caine said Thales expected to hear from UK authorities in coming weeks on remedies required in return for approval of the delayed sale of ground transport activities to Hitachi Rail for 1.66 billion euros.

Britain's Competition and Markets Authority aims to complete its probe by Aug. 11 after provisionally finding the sale could reduce choice for state-owned Network Rail.

The two parties have called the finding "legally unsound," according to a redacted copy of their joint response. Britain's RMT rail union says it firmly opposes the deal, which was originally expected to close in late 2022 or early 2023.

"We are advancing and passing the steps one by one," Caine told reporters.

"(CMA) is the next step. Once we have that - given that things are fairly clear on the European Commission side - I think we will have a clear picture of the definitive timeline,"

Thales said the second half would also be affected by supply chain tensions and the euro's weakening against the dollar.

Chief Financial Officer Pascal Bouchiat said the supply of semi-conductors had improved following a global chip crisis but that sourcing circuit boards and especially mechanical hardware remained very challenging.

"There are elements which are improving and others which really remain under stress," he said.

($1 = 0.8977 euros) (Reporting by Tim Hepher, Editing by Dominique Vidalon and Sherry Jacob-Phillips)