Wings Magazine

CAE reports third quarter net earnings drop

Feb. 11, 2010, Montreal - Flight simulator and training company CAE Inc. said its civil aerospace business has held up "reasonably well'' through the market downturn, which it believes may be on a slow path to recovery.

February 11, 2010  By The Canadian Press

“While this gives us more confidence, we feel patience will be
required as the market works its way back from very low levels,''
CEO Marc Parent said Wednesday during a conference call.

The Montreal-based company saw both its net earnings and revenues
slip in its latest quarter.

Overall net income fell to $37.7 million or 15 cents per share
for the three months ended Dec. 31, the third quarter of CAE's 2010
financial year. That compared with a profit of $52.1 million or 20
cents per share a year earlier.

Revenue slid to $382.9 million, down nearly 10 per cent from
$424.6 million.


The company's military business continued to provide a buffer for
the civil aerospace softness, accounting for $207.9 million or 54
per cent of the latest quarter's revenues.

CAE also booked a charge of $3.9 million in the latest quarter
related to its restructuring plans that have been rolling out since
last May.

The company expects to pay a total of $34 million in
restructuring charges in total as part of a process that will wrap
up by the end of its financial year, which ends March 31.

"We have been restructuring the size of our business according to current and expected demand so that we can continue to be profitable through the downturn,'' Parent told analysts.

Revenue from civil training and services fell by 15 per cent to $102.4 million, from $120.9 million in the third quarter of fiscal 2009. Revenue from civil simulation products dropped to $72.6 million, from $119.3 million a year before.

However, compared with the previous quarter ended Sept. 30, CAE's civil training segment was down just $400,000 and civil simulation equipment sales improved by $8.7 million.

While there are some signs the civil markets should grow in 2010, the global airline industry is "clawing its way back'' from a very low base. He expects they will continue to lose money this year and may only become profitable in 2011 or 2012.

"Nonetheless we're optimistic that both passenger and cargo markets will continue to show signs of progress.''

With its presence in the fastest growing markets of Middle East and Asia, Parent said CAE is positioned to ride improved demand.

CAE has sold 14 full flight simulators so far this year and suffered one cancellation from last year. It continues to believe it will sell 20 units this year even though deals are taking longer to complete as airlines face financing challenges.


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